# Module 2: RWA Liquidity Arb (DEX-CEX)

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Operator and jurisdiction: BASIS is operated by BASIS DIGITAL INFRASTRUCTURE LTD, a Seychelles IBC (LEI: [254900IX2F2KCWNSSS64](https://lei.bloomberg.com/leis/view/254900IX2F2KCWNSSS64)).
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## 1) Objective

Capture short-term price discrepancies between:

* DEX pools (on-chain pricing)
* CEX orderbooks (off-chain pricing)

for PAXG.

This module exists because DEX pricing is influenced by:

* pool liquidity depth
* swap flow bursts
* on-chain execution costs
* execution precision conditions

CEX pricing is influenced by:

* centralized orderbook liquidity
* faster matching engines
* market maker inventory constraints

These two environments do not update identically.

## 2) The basic trade

A typical pattern:

* Buy PAXG where it is undervalued, for example on a DEX
* Sell PAXG where it is overvalued, for example on a CEX

Or reverse the direction when the deviation moves the other way.

## 3) Why this is hard, and why BASIS can do it

DEX–CEX arbitrage typically fails for individuals because:

* network fee spikes can erase expected profit
* execution can be displaced by competing order flow
* confirmation timing can introduce delay
* slippage can expand quickly in shallow pools

BASIS treats this as a research-driven module with strict eligibility controls supported by Base58 Labs research and deterministic execution infrastructure:

* trades run only when net expected value remains positive after worst-case cost and slippage bounds
* on-chain execution uses atomic or revertable patterns where available
* the module pauses under chain congestion or execution precision stress conditions through state-machine risk controls
* routing decisions are constrained by mathematical thresholds rather than discretionary judgment

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Infrastructure basis:

* BHLE routing stack
* Sub-50μs latency
* 100K+ OPS processing capability
* Proprietary routing infrastructure
* Deterministic execution and bounded-risk state transitions
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## 4) Eligibility constraints

Examples of eligibility filters include:

| Constraint                                        | Purpose                                             |
| ------------------------------------------------- | --------------------------------------------------- |
| Minimum pool liquidity and depth                  | Avoid thin venues and unstable execution            |
| Maximum allowed network fee bound                 | Preserve positive expected value                    |
| Minimum spread above total cost and safety margin | Filter false opportunities                          |
| Execution precision indicators below threshold    | Reduce adverse routing conditions                   |
| Stable venue transfer and settlement status       | Prevent trapped capital during cross-venue activity |

## 5) Primary risks

* on-chain congestion and fee spikes
* structural alpha capture degradation from adverse order flow
* partial execution risk
* CEX transfer or settlement constraints
* sudden liquidity withdrawal in PAXG pools

## 6) Risk controls

* on-chain execution via revertable transactions where possible
* fee bounds and timeout controls
* automatic protection triggers during chain stress or abnormal slippage
* deterministic monitoring and pause logic when repeated failures occur
* state machine risk controls that prevent invalid execution paths

## 7) Operational posture

This is a selective module, not a constant-activation strategy.

BASIS activates it only when market structure, execution precision, and settlement conditions align within strict bounds. The goal is not aggressive turnover. The goal is controlled structural alpha capture with deterministic execution quality.

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PAXG support is active on BASIS.

Deposits and withdrawals for PAXG use a connected Web3 wallet. PAXG can be swapped only 1:1 into stPAXG within the platform. Rewards accumulate in real time as stPAXG in the Staking Wallet.
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