Basis Trade
Last updated 17 October 2026Last verified 17 October 2026
What is a basis trade in crypto?
A market-neutral strategy that captures the spread between spot and futures prices. In crypto, the most common form holds spot ETH (or an LST) while shorting the equivalent perpetual futures position, capturing the funding rate as yield when it is positive. Risks include funding rate reversals, liquidation risk on the short leg if margin is insufficient, and exchange counterparty risk if the short is held on a CEX.
TradFi equivalentThe name is borrowed from the cash-and-carry trade, but with no expiry there is no date on which the basis must converge. The carry is a floating funding rate that can turn against the position and stay there, and the short leg sits at an exchange rather than a clearing house.