Market Volatility & Quantity Preservation

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

Currency convention: Portfolio values may be displayed in USDT as an internal accounting and reference unit for USD-equivalent reporting. USDT is not a depositable or withdrawable asset on BASIS. See Risk Disclosure.

Cryptocurrency markets are highly volatile. BASIS is designed around quantity preservation and quantity growth in native assets through market-neutral infrastructure and structural alpha capture. Users should clearly distinguish between quantity preservation, which the system is built to support, and fiat-value preservation, which is not guaranteed.

This page explains how market volatility affects user positions and how to interpret performance during changing market conditions.

---

1. The BIVB Model: 1:1 Same-Token Conversion

BASIS uses the BASIS Intrinsic Value Balance (BIVB) framework to convert native assets in the Funding Wallet into staking tokens in the Staking Wallet on a strict same-token basis.

Native asset deposited	Staking asset received	Conversion
1 BTC	1 stBTC	1:1 in quantity terms
1 ETH	1 stETH	1:1 in quantity terms
1 SOL	1 stSOL	1:1 in quantity terms
1 PAXG	1 stPAXG	1:1 in quantity terms

Swap and staking logic on BASIS is same-token only:

• BTC ⇄ stBTC

• ETH ⇄ stETH

• SOL ⇄ stSOL

• PAXG ⇄ stPAXG

Cross-asset conversion is not supported.

The system is designed to preserve and grow the quantity of the deposited native asset, not to maintain a fixed fiat valuation.

---

2. Quantity Preservation: What the System Is Built to Support

The platform is designed so that:

• Depositing and staking 1 BTC results in 1 stBTC on a 1:1 basis

• Unstaking returns the full staked position only, together with accrued rewards

• Rewards accumulate in real time as the same stToken in the Staking Wallet

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

For example, if you stake 1 BTC and the strategy produces a 10% return over 90 days, your unstaked balance would reflect 1.10 BTC equivalent in the same asset framework before any applicable fees.

This means the design objective is quantity growth of the underlying asset. If the asset is BTC, the goal is more BTC over time. If the asset is ETH, the goal is more ETH over time.

---

3. Valuation Risk: What Is Not Guaranteed

Even if the quantity of your asset increases, the USDT-displayed or fiat-equivalent value of the position can decline if the market price of the underlying asset falls.

This is a basic property of holding volatile crypto assets and is separate from the platform's execution precision or risk-control design.

Illustrative Example

Metric	At staking	After 90 days
BTC quantity	1.00 BTC	1.10 BTC (+10%)
BTC reference price	100,000 USDT	50,000 USDT (-50%)
Displayed valuation	100,000 USDT	55,000 USDT (-45%)

In this scenario:

• The system performed as intended in quantity terms: BTC quantity increased by 10%

• The BTC market price fell by 50%

• The displayed USDT-equivalent value still declined by 45%

Without the quantity gain, the position would display 50,000 USDT equivalent. The additional BTC quantity partially offsets the price decline, but does not eliminate it.

The Inverse Scenario

Metric	At staking	After 90 days
BTC quantity	1.00 BTC	1.10 BTC (+10%)
BTC reference price	100,000 USDT	150,000 USDT (+50%)
Displayed valuation	100,000 USDT	165,000 USDT (+65%)

In a rising market, quantity growth amplifies the increase in displayed value.

---

4. How Volatility Affects Strategy Execution

Although the platform uses market-neutral architecture, extreme volatility can still influence operational conditions.

4.1 Execution Timing Risk

Even with BHLE infrastructure engineered for sub-50μs latency and 100K+ OPS, there is always a finite interval between order events, hedge updates, and venue confirmation.

During extreme volatility:

• Normal conditions: price movement over the execution window is typically limited

• High volatility: price movement during the execution window can exceed the expected spread or edge

This is why deterministic execution, routing quality, and state-machine controls matter.

4.2 Funding and Carry Regime Changes

Cash-and-carry and related structural alpha capture strategies depend on spread conditions, basis relationships, and funding environments. These can change rapidly.

Examples:

• In favorable conditions, funding and basis dynamics support strategy returns

• In stressed conditions, those same dynamics can compress, invert, or temporarily become adverse

4.3 Liquidity Compression

During sharp market events, order book depth can contract as quoting activity declines. This can increase:

• slippage

• partial-fill risk

• hedge timing risk

• routing complexity

---

5. Platform Mitigation Measures

BASIS applies deterministic controls intended to reduce exposure to volatile market conditions.

Measure	Description
Volatility-adjusted sizing	Position sizing is reduced as volatility rises
State-machine pause logic	Rapid market dislocation can trigger automated protective pauses
Carry-condition monitoring	Unfavorable spread or funding regimes can trigger exposure reduction
Continuous hedge balancing	Neutrality targets are monitored and adjusted systematically
Capital-protection controls	Stress conditions can shift the system into a more defensive posture

These controls are not designed to eliminate all risk. They are designed to constrain risk within predefined mathematical and operational boundaries.

---

6. Why This Matters for User Decision-Making

Users should decide whether they are seeking:

• Quantity growth exposure: this is the system's design objective

• Fiat-value preservation: this is not guaranteed

BASIS is not a fiat-protected savings product. It is a crypto-native yield and structural alpha platform built around deterministic execution, math-constrained strategy logic, and native-asset accounting.

If you deposit BTC, your economic exposure remains BTC-based. If you deposit ETH, your economic exposure remains ETH-based. If you deposit SOL, your economic exposure remains SOL-based. If you deposit PAXG, your economic exposure remains PAXG-based.

Funding Wallet

• Holds native assets

• Used for deposit and withdrawal

• Supported assets: BTC, ETH, SOL, PAXG

Staking Wallet

---

7. Practical Notes

1

Deposits

• BTC deposit: copy your BASIS-assigned unique BTC deposit address

• ETH, SOL, and PAXG deposit: connect a supported Web3 wallet such as MetaMask

2

Swap

• Same-token swap only

• Fee: 0.01%

3

Unstake

• Full position only

• No partial unstake

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

4

Withdrawal

• Native asset withdrawal from Funding Wallet

• Fee: 0.05%

• BTC: typically 30 minutes to 1 hour

• ETH, SOL, PAXG: typically 1 to 6 minutes

---

8. Key Takeaway

The core question is not whether the platform can hold a fixed fiat value for a volatile asset. It cannot guarantee that.

The core question is whether the system can preserve and grow asset quantity with disciplined execution precision, deterministic controls, and constrained risk architecture.

That is the BASIS design objective.

---

Next: Read USDT (USD-Equivalent) Valuation Risk for more on the use of USDT as an internal display and accounting convention.