Module 4: Peg Deviation Monitor

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

Currency convention: All amounts are displayed in USDT as a USD-equivalent internal accounting unit. USDT is not depositable or withdrawable on BASIS. Supported deposits and withdrawals use native assets only: BTC, ETH, SOL, and PAXG.

1) Objective

Monitor deviations between:

• PAXG market price across supported venues, and

• the implied reference value of 1 oz of gold under the platform’s accounting convention.

The goal is not necessarily to trade every deviation. The primary goal is to:

• detect liquidity stress

• quantify arbitrage surface quality

• support risk state decisions

2) Why peg deviations exist

Peg deviations can occur due to:

• shallow liquidity in certain pools

• withdrawal frictions across venues

• sudden demand shocks

• on-chain costs and execution precision constraints

• issuer or redemption constraints

3) Monitoring metrics

A professional monitor tracks:

• deviation magnitude (bps / %)

• deviation persistence (duration)

• liquidity depth at deviation points

• execution precision indicators for on-chain venues

• cross-venue coherence (whether the deviation is local or systemic)

PAXG support is live and active on BASIS.

PAXG deposits and withdrawals use a connected Web3 wallet. PAXG can only be swapped 1:1 into stPAXG, and stPAXG can be staked to earn rewards in real time within the Staking Wallet.

4) How monitors feed the risk engine

If deviations exceed defined thresholds and cannot be explained by normal liquidity dynamics, the system should:

• reduce exposure

• trigger BSCB for protective pause

• enter DMM if repeated anomalies occur

5) Trading rule (if enabled)

A mathematically verified trading rule requires:

• conservative EV gates

• strict slippage bounds

• defined exit plans

Without these controls, peg arbitrage can become tail-risk exposure.

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Peg deviations are information. A research-driven platform extracts information first and acts only when eligibility conditions are satisfied.

BASIS emphasizes deterministic execution, mathematical constraints, and state-machine risk controls.

This framework is supported by Base58 Labs research, proprietary routing infrastructure, and BHLE performance characteristics including sub-50μs latency and 100K+ OPS.