Basis Trade
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.