How Is the Annual Percentage Yield (APY) of a Basis Trade Calculated?

The APY of a basis trade is calculated by annualizing the funding rate and dividing it by the required capital. The formula is typically: APY = (Average Funding Rate per Interval x Number of Intervals per Year) / (Initial Margin + Spot Capital).

This calculation provides an estimated return, assuming the funding rate remains constant. The actual APY will fluctuate based on the variable funding rate and capital requirements.