# Arbitrage Modules {% hint style="info" %} Operator and jurisdiction: BASIS is operated by BASIS DIGITAL INFRASTRUCTURE LTD, a Seychelles IBC (LEI: [254900IX2F2KCWNSSS64](https://lei.bloomberg.com/leis/view/254900IX2F2KCWNSSS64)). {% endhint %} This section documents how PAXG is used inside BASIS. The purpose is to define active modules, eligibility conditions, risk sources, and required control layers. It does not constitute a promise of returns. *** ### Module Overview | # | Module | Strategy | Status | Risk Level | | - | ----------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ------ | ---------------- | | 1 | Golden BASIS (Spot-Perp) | Capture funding and basis differentials while minimizing directional exposure through deterministic hedging logic. | Active | Low-Medium | | 2 | RWA Liquidity Arb (DEX-CEX) | Capture short-term pricing dislocations between on-chain pools and centralized venues using structural alpha capture. | Active | Medium | | 3 | Collateral Yield Optimization | Use PAXG as conservative collateral in vetted lending environments to improve capital efficiency. | Active | Medium | | 4 | Peg Deviation Monitor | Measure peg stress, liquidity fragmentation, and venue dispersion. Execute only when strict expected-value gates and execution precision conditions are satisfied. | Active | Low (Monitoring) | ### How the Modules Work Together The four modules operate as an integrated system. Module 4, Peg Deviation Monitor, functions as a safety layer for the other modules. It continuously monitors the PAXG price relative to reference gold pricing and triggers protective actions when deviation, spread instability, or liquidity deterioration exceed permitted thresholds. Modules 1 and 2 are the primary structural alpha engines. * Module 1 captures funding-rate and basis differentials when PAXG perpetual markets trade away from spot reference levels while maintaining constrained directional exposure. * Module 2 captures cross-venue price discrepancies caused by fragmented liquidity between decentralized venues and centralized exchanges. Module 3 is a capital-efficiency layer. Capital not actively allocated to Modules 1 and 2 may be routed into vetted lending environments where risk constraints, collateral parameters, and withdrawal conditions remain within BASIS control tolerances. {% hint style="success" %} PAXG support is live on BASIS. * Deposit asset: PAXG * Deposit method: connect a Web3 wallet such as MetaMask * Swap path: PAXG ↔ stPAXG only, 1:1 * Rewards accrue in real time as stPAXG in the Staking Wallet * Unstake is full-position only after the selected lock-up period ends {% endhint %} ### Gold-Specific Risk Considerations PAXG introduces risk factors that differ from crypto-native asset strategies. | Risk Factor | Description | Mitigation | | ----------------------------- | -------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------- | | Gold Market Hours | Reference gold markets operate on specific schedules. PAXG pricing behavior may differ during active market hours and off-hours. | Modules adjust quoting thresholds, hedge tolerances, and participation rules by market session. | | Redemption Constraints | PAXG redemption into physical gold depends on issuer processes, minimum thresholds, and settlement timing. | Modules do not depend on physical redemption as an exit path. | | Correlation Regime | Gold and digital asset markets can shift between low, moderate, and inverse correlation regimes during macro stress. | Modules monitor rolling correlation, spread persistence, and hedge efficiency before capital activation. | | Venue Liquidity Fragmentation | On-chain and centralized market depth can diverge materially during volatility. | Routing logic uses deterministic execution rules, venue scoring, and state-based participation controls. | | Oracle and Reference Drift | Reference pricing inputs may momentarily diverge across data sources. | Execution requires cross-check validation, tolerance bands, and fail-closed state machine controls. | ### Control Framework Each module inherits the global BASIS risk state machine and module-specific eligibility filters. The control architecture emphasizes: * deterministic execution * mathematical constraint checks * state machine risk controls * structural alpha capture rather than directional speculation * execution precision through proprietary routing infrastructure BASIS trading and routing infrastructure is informed by Base58 Labs research and BHLE design principles, including sub-50μs latency targets, 100K+ OPS processing capability, and deterministic venue selection under constrained risk states. ### Wallet and Asset Handling for PAXG | Function | Rule | | --------------- | --------------------------------------------------- | | Deposit | Connect a Web3 wallet and deposit native PAXG | | Funding Wallet | Holds native PAXG for deposit and withdrawal | | Staking Wallet | Holds stPAXG for staking and reward accumulation | | Swap | PAXG → stPAXG and stPAXG → PAXG only, 1:1 | | Display Unit | USDT is used internally for accounting display only | | Withdrawal Fee | 0.05% | | Swap Fee | 0.01% | | Deposit Fee | 0% | | Withdrawal Time | Typically 1–6 minutes for PAXG | ### Next Step Choose a module page below to review detailed mechanics, eligibility rules, execution constraints, and risk controls for each PAXG module. --- # Agent Instructions: 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: ``` GET https://docs.basis.pro/paxg-integration/modules.md?ask= ``` The question should be specific, self-contained, and written in natural language. 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.