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What Is ‘Basis’ in the Context of Futures Trading?

Basis is the difference between the price of a futures contract and the spot price of its underlying asset. It is calculated as Futures Price minus Spot Price.

In traditional futures, basis typically narrows as the contract approaches expiration. For perpetual futures, the funding rate mechanism is specifically designed to keep the basis close to zero, ensuring the perpetual price closely tracks the spot price.

How Does the ‘Basis’ of a Perpetual Swap Relate to the Funding Rate?
What Is the Purpose of the “Funding Rate” Mechanism in Perpetual Futures Contracts?
What Is the Key Difference between a Perpetual Swap and a Traditional Futures Contract?
How Does the “Funding Rate” Mechanism Work to Keep the Perpetual Swap Price near the Spot Price?