Basis arbitrage
The same asset priced differently on two venues. Long the cheap leg, short the rich one, profit if the gap closes.
The gap
Basis is a price difference for the same asset between two markets — perp vs perp on different venues, or spot vs perp. In percent: (priceShort - priceLong) / mid × 100. A captured example: LAB traded 0.81% higher on HTX’s perp than on Gate’s spot at the same moment.
Gaps like this appear around listings, delistings, thin books, one-venue liquidation cascades, and anywhere market makers are slow to arbitrage flow between venues.
The trade
Long the venue where the asset is cheap, short where it is rich, same size. If the prices converge, the position earns the gap regardless of market direction: close both legs when the basis is near zero and keep the difference, minus costs.
Unlike funding arbitrage, the payoff here is the price move between the legs, not a scheduled payment. Funding still accrues while the position is open — it can add to the trade or eat it, depending on the signs of both legs’ rates.
Perp-perp vs spot-perp
- Perp × perp — both legs are futures. Capital-efficient (leverage on both sides) but both legs carry funding, and both can be liquidated. The gap is enforced only by arbitrage flow, not by a hard mechanism.
- Spot × perp — buy the asset, short the perp. The spot leg has no funding and no liquidation, and convergence has a harder anchor: a perp’s index tracks spot. This shades into spot-perp carry when funding on the short is the actual income source.
Why gaps close — and sometimes don’t
Gaps close because arbitrageurs trade them: buying the cheap venue and selling the rich one moves both prices toward each other. Most dislocations on liquid assets resolve within hours.
Some do not. A gap backed by a real difference — a venue halting withdrawals, a delisting on one side, a token migration — is not a mispricing but a discount, and it can widen. And a gap that only exists on a stale or artifact quote was never real; see Data artifacts.