# Module 4: Peg Deviation Monitor

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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

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)

{% hint style="warning" %}
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.
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### 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.

***

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

{% hint style="success" %}
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.
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