◇ GLOSSARY
Basis
The difference between perp price and the spot index. Positive basis means the perp trades rich to spot; negative means cheap. Funding is the mechanism that compresses basis over time by transferring cash between longs and shorts.
Basis is perp minus index, usually in dollars or bps. BTC perp at $67,200 with index $67,000 is +$200 rich. Funding sign and magnitude follow that gap: rich books tend to charge longs until arbs short the perp and buy spot.
Basis is not free money for retail. Closing it needs capital on both legs and tolerance for funding flipping mid-trade. It is the signal that tells you who pays carry this interval.
Watch basis when funding looks cheap. A +5 bps/h headline can be +40 bps/day if the perp stays rich. The trade is carry plus execution, not the spread alone.