Backpack levels up the Basis Trade with yield from multiple sources. Use lent assets as collateral, collect the lending pool yield and earn the funding rate from the short Perpetual Futures position.
A common trading strategy amongst institutional or HNW individuals in crypto is to hold a spot long position in one currency and then short an equal and opposite amount on the perpetual future contract.
The aim here is to profit from the funding rate on the perpetual future contract while having no directional pricing risk because any gain on the spot long will be offset by a loss on the perpetual short, and vice versa.
Crypto Basis Trading on Backpack Exchange
How To Basis Trade on Backpack Exchange
1) Enable Auto Lend and Auto PnL Realization
See Enable Auto Lend and Auto PnL Realization for detailed instructions.
2) Set your Margin Leverage to 1x
See Borrow Using Margin for detailed instructions.
3) Open a Sell/Short Perp position
Choose the token you wish to Short and enter the amount.
- Note: Do not open a Short position that is larger than your collateral.
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