Plain English
A basis trade is a market-neutral strategy: buy spot, short the equivalent perp or future, and earn the funding rate or basis spread as yield. Used by funds, market makers, and HNW investors to capture single-digit-to-low-double-digit annualized yield without directional exposure.
How it actually works
You hold 1 BTC; you short 1 BTC perp at, say, 10% annualized funding. Spot and perp move together — the long and short cancel. You collect funding for as long as it stays positive. The trade unwinds when you sell spot and close the short simultaneously. The yield is real but capped by funding rates, which themselves are mean-reverting.
What it means for you
Basis trading is one of the cleanest HNW yield strategies in crypto — single-digit returns in bear markets, 10–20% in bull markets, no directional risk. Best executed via prime brokerage (Coinbase, Hidden Road) for capital efficiency, or via on-chain venues (Ethena uses stETH + short perp). Watch for funding rate compression as the trade gets crowded.
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Educational content only. Not investment, tax, or legal advice.