Position Unwinding Protocol

Operator & jurisdiction: BASIS is operated by BASIS DIGITAL INFRASTRUCTURE LTD, a Seychelles-incorporated entity (LEI: 254900IX2F2KCWNSSS64).

Currency convention: Values may be displayed in USDT as an internal accounting and reporting unit representing USD-equivalent value. USDT is not a depositable or withdrawable asset on BASIS. Deposits and withdrawals are supported in native assets only: BTC, ETH, SOL, and PAXG.

This protocol defines how BASIS reduces or closes market exposure when:

• users request unstaking followed by withdrawal

• the system enters protective states such as BSCB or DMM

The objective is to minimize:

• slippage

• liquidation risk

• settlement failure

• hedge breakage during execution

1) Why unwinding is non-trivial

BASIS strategies may include:

• cross-venue arbitrage positions

• derivative hedges such as perpetuals

• on-chain lending positions

• structural alpha capture workflows coordinated across venues

These positions cannot be closed safely with a simple "sell everything immediately" approach. Unwinds must be sequenced so hedge relationships remain intact while capital is recovered.

Improper unwind ordering can temporarily expose the book to directional risk, margin stress, or forced closure. BASIS uses deterministic execution rules and state machine risk controls to reduce this risk.

2) Canonical unwind sequence

A standard unwind sequence is shown below.

Step	Action	Purpose
1	Close arbitrage legs	Exit offsetting venue positions and neutralize residual exposure
2	Close derivative hedges	Unwind perpetual or futures hedges and restore margin safety
3	Recover on-chain positions	Repay loans, withdraw collateral, and exit liquidity positions
4	Reconcile balances	Confirm asset settlement and internal accounting consistency
5	Credit user side balances	Return claimable stToken proceeds to the Staking Wallet on unstake

This order reduces the probability that a hedged portfolio becomes unhedged during the unwind process.

3) Protective-state unwinding: BSCB and DMM

When BSCB is triggered:

• new strategy entries stop

• exposure reduction takes priority over return generation

• routing logic shifts toward capital preservation and execution precision

When DMM is triggered:

• positions are closed methodically

• root-cause analysis is performed

• system resumption requires stability confirmation

• only validated recovery paths are re-enabled

BASIS infrastructure is designed around deterministic execution, mathematical constraints, and state-machine-based risk controls. This includes BHLE routing characteristics such as sub-50μs latency, 100K+ OPS handling, and proprietary routing infrastructure to support precise exposure reduction under stress.

4) User-facing implications

Users may observe the following during unwind events:

• withdrawals may take additional time

• reward accrual may pause temporarily

• safety is prioritized over speed

• unstake processing may depend on completion of strategy-side closure steps

5) Relationship to staking and withdrawal flow

On BASIS, rewards accumulate in real time as the same stToken in the Staking Wallet.

Unstaking behavior:

• unstake is full-position only

• the unstake amount is auto-MAX

• there is no partial unstake flow

• fixed pools can only be unstaked after the lock-up period ends

• once unstake completes, the claimable amount is auto-credited to the Staking Wallet as stToken

After unstake, users may swap 1:1 into the corresponding native asset:

• stBTC → BTC

• stETH → ETH

• stSOL → SOL

• stPAXG → PAXG

Swap rules:

• same-token only

• 1:1 conversion only

• swap fee: 0.01%

Withdrawal rules:

• Funding Wallet holds native assets for deposit and withdrawal

• Staking Wallet holds stTokens for staking and reward accumulation

• withdrawal fee: 0.05%

• BTC withdrawal time: 30 minutes to 1 hour

• ETH, SOL, and PAXG withdrawal time: 1 to 6 minutes

6) Asset flow reference

Funding Wallet (BTC / ETH / SOL / PAXG)
        ↓
Same-token 1:1 swap
        ↓
Staking Wallet (stBTC / stETH / stSOL / stPAXG)
        ↓
Stake
        ↓
Real-time reward accumulation in same stToken
        ↓
Unstake (full position only)
        ↓
stToken auto-credited to Staking Wallet
        ↓
Same-token 1:1 swap back to native asset
        ↓
Funding Wallet
        ↓
Withdraw

7) Deposit context for unwind readiness

Deposit methods differ by asset:

BTC

• Copy the BASIS-assigned BTC deposit address

• Each account receives a unique BTC address

• No Web3 wallet connection is required

• Minimum deposit: 0.0001 BTC

ETH / SOL / PAXG

8) Operational principle

A survivable system does not optimize only for nominal speed. It prioritizes:

• deterministic execution

• hedge integrity

• settlement certainty

• capital preservation under stress

BASIS combines these controls with research support from Base58 Labs, emphasizing structural alpha capture through disciplined sequencing rather than uncontrolled liquidation behavior.

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Next: see Worked Examples for scenario-based unwind paths.