Basis trade
cash-and-carrybasis arbitrage
Long spot + short perpetual (or futures) to harvest the funding-rate differential, structurally close to delta-neutral.
The basis trade harvests the Funding rate paid by leveraged longs to shorts when perps trade at a premium to spot. Ethena's USDe is the most prominent stablecoin built around the basis trade — its yield is the funding rate accrued on the short perp leg, with collateral in liquid staking tokens. Risks: prolonged negative funding, exchange counterparty risk, custody risk on perps venue.
Related terms
- Delta-neutralA position where price-sensitivity to the underlying asset nets to zero — long spot offset by short derivative.
- USDeEthena's synthetic dollar — collateralised by LSTs / LRTs hedged with short ETH perps.
- Funding rateA periodic payment between long and short perp holders that anchors perpetual price to spot.
- Perpetual (perp)A futures contract with no expiry, kept anchored to spot via the [[funding-rate]].