> For the complete documentation index, see [llms.txt](https://docs.ethena.fi/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.ethena.fi/backing-assets/crypto-basis-trade.md).
# Crypto Basis Trade
Volatile assets, such as spot crypto and tokenised commodities, are paired with a corresponding short derivatives position so that the combined position is delta-neutral and its dollar value remains relatively stable.
In this process, the protocol aims to collect the funding rate.
#### **Funding Rate**
Historically due to the mismatch between demand & supply for exposure to digital assets, there has been a **positive funding rate & basis spread earned by participants who are short this delta exposure.**
For ETH perpetuals, while this earned funding rate is variable, in 2021 it returned 16%, in 2022 0.6%, in 2023 \~9%, and in 2024 returned \~13% APY on a open interest weighted basis.
When allocated to the crypto basis trade, the Ethena protocol earns this funding rate when the funding rate is positive.
#### **Delta Neutrality**
USDe derives its relative peg stability from executing automated and programmatic delta-neutral hedges with respect to the underlying backing assets.
Hedging the price change risk of the backing asset in the same size minimizes fluctuations in the backing asset price as the change in value of the backing assets asset is generally offset 1:1 by the change in value of the hedge.
Since the backing assets can be perfectly hedged (in most market conditions) with a short position of equivalent notional, USDe only requires 1:1 "collateralization" in the majority of market conditions.
See[ Delta Neutrality](/backing-assets/crypto-basis-trade/delta-neutral-stability.md) for more details.
---
# Agent Instructions
This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com.
## Querying This Documentation
If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question.
Perform an HTTP GET request on the current page URL with the `ask` query parameter, and the optional `goal` query parameter:
```
GET https://docs.ethena.fi/backing-assets/crypto-basis-trade.md?ask=&goal=
```
`ask` is the immediate question: it should be specific, self-contained, and written in natural language.
`goal` is optional and describes the broader end goal you are ultimately trying to accomplish on behalf of the user. GitBook uses it to tailor the answer towards what is most useful for that goal.
The response will contain a direct answer to the question and relevant excerpts and sources from the documentation.
Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.