# Basis Perpetuals

This perpetual contract tracks the short-term basis (premium/discount) between stETH and ETH, providing direct exposure to the relative value of staked ETH versus ETH.

<table data-header-hidden><thead><tr><th width="157.99993896484375"></th><th></th></tr></thead><tbody><tr><td><strong>Characteristic</strong></td><td><strong>Description</strong></td></tr><tr><td><strong>What it Tracks</strong></td><td>The instantaneous premium or discount of stETH versus ETH, expressed as the stETH/ETH basis.</td></tr><tr><td><strong>Index Definition</strong></td><td><p><span class="math">X_{t} = 100 \times \left(\frac{p^{\text{stETH}}_{t}}{p^{\text{ETH}}_{t}} - 1\right)</span></p><p></p><p>Where  <span class="math">p^{\text{stETH}}_{t}</span>  and <span class="math">p^{\text{ETH}}_{t}</span> are the mid-quotes (or robust TWAP mids) of stETH and ETH from the reference markets. X<sub>t</sub> is measured in percentage points of basis (e.g., X<sub>t</sub> = 2.0 ↔ 2% premium).</p></td></tr><tr><td><strong>Oracle Type</strong></td><td>A 24/7 crypto oracle that computes the stETH/ETH basis from a composite of stETH and ETH price feeds, with robust aggregation and band-limiting during stressed or illiquid conditions.</td></tr><tr><td><strong>Market Type</strong></td><td>Cash-settled index perpetual.</td></tr><tr><td><strong>PnL Formula</strong></td><td><p><strong>• PNL (Long)</strong> = (<code>Exit_Price</code> - <code>Entry_Price</code>) × <code>Position_Size</code> + <code>Total_Funding_Received</code></p><p><strong>• PNL (Short)</strong> = (<code>Entry_Price</code> - <code>Exit_Price</code>) × <code>Position_Size</code> + <code>Total_Funding_Received</code></p><p>Where:</p><p>• <code>Entry_Price</code> / <code>Exit_Price</code>: The price at which a position is opened and closed, respectively.</p><p>• <code>Position_Size</code>: The number of BASIS contracts in a position.</p><p>• <code>Total_Funding_Received</code> (or <code>Total_Funding_Paid</code>): The sum of all hourly funding payments accrued over the duration of the position. This value can be positive (if a user were paid by the other side) or negative (if the user paid the other side).</p></td></tr><tr><td><strong>Use Cases</strong></td><td><p><strong>Long (Bet on stETH premium widening):</strong></p><p>• Hedge a portfolio that is short stETH and long ETH (or synthetically short the basis) by going long BASIS to profit if the stETH premium increases.</p><p>• Express a view that staking yield, liquidity preference, or redemption dynamics will cause stETH to trade at a higher premium relative to ETH.</p><p></p><p><strong>Short (Bet on discount / premium compression):</strong></p><p>• Hedge a portfolio that is long stETH and short ETH by going short BASIS to protect against the stETH discount widening.</p><p>• Express a view that current stETH premium is unsustainably high and will compress back toward parity (or a discount) versus ETH.</p></td></tr><tr><td><strong>Users</strong></td><td><p>• LST protocols, treasuries, and DAOs managing stETH and ETH balances (hedgers)</p><p>• Basis and relative-value funds (speculators)</p><p>• Sophisticated retail traders with familiarity in LST basis markets</p></td></tr><tr><td><strong>Vol-stat (σ)</strong></td><td>Medium–High: the BASIS product can experience sharp moves during depeg events, liquidity shocks, or large flows between stETH and ETH, even when ETH/USD itself is relatively stable. Risk parameters are set accordingly, with conservative leverage compared to standard ETH perps.</td></tr><tr><td><strong>Margin Numbers</strong></td><td>Derived from the max leverage tiers. For the initial 3x leverage tier, the initial margin (IM) is ~33.3% of the notional position value.</td></tr></tbody></table>

[See additional market mechanics and parameters](https://docs.nunchi.trade/market-mechanics-and-parameters#steth-eth-basis-perp-market-parameters)


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