# Fundamentals

**BasisX** is an innovative HIP-3 deployment on **Hyperliquid** that introduces **tokenised yield perpetuals** — a new asset class that transforms *yields and interest rates* into tradeable instruments.

Initially built around crypto perpetual funding rates, BasisX now extends this model to **real-world yield benchmarks** and **on-chain staking yields** — enabling a unified market for the global cost of capital.

**What BasisX Does**

BasisX perpetual futures are cash-settled contracts that track the *exponentially compounded yield* of underlying sources — including:

* Funding rates from perpetual futures markets
* Tokenised real-world yield assets (e.g., Treasury ETFs like TLT, BND)
* Staked token yields (e.g., stETH, kHYPE, restaked assets)

Unlike traditional perpetuals that track asset prices, BasisX tracks the *yield curve itself* — allowing traders to:

* **Speculate** on yield direction, volatility, and term structure
* **Hedge** exposure to funding payments or staking APY shifts
* **Arbitrage** yield and rate spreads across timeframes and markets

The protocol leverages **Hyperliquid’s HIP-3 infrastructure** while introducing novel oracle, pricing, and settlement mechanics purpose-built for continuously compounding yield markets.

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#### **Key Characteristics**

1. **Yield or Funding Rate as the Underlying**
   * Tracks the continuously compounded annualised rate using `e^(r_apy)`
   * Supports both crypto and real-world yield sources
   * Updates hourly with fresh oracle data from Hyperliquid and integrated RWA feeds
2. **Linear-Exponential Price Scaling**
   * Token Price = e^(r\_apy)
   * Perfectly maps both positive and negative yield environments
   * Ensures smooth growth across compounding timeframes
3. **24/7 Global Market Access**
   * Continuous trading on Hyperliquid
   * Hourly oracle updates from both DeFi and real-world data
   * No market close or settlement downtime
4. **Cash Settlement in USDC**
   * Fully cash-settled — no physical delivery
   * Automatic P\&L calculation based on yield changes
   * Unified settlement layer across all BasisX markets

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#### **The Bigger Picture**

BasisX is pioneering **yield perpetuals** — the building blocks of on-chain interest rate markets.\
From crypto funding rates to Treasury yields and staking APYs, BasisX creates a **liquid, composable layer** for trading and hedging yield curves across DeFi and TradFi.

This is where crypto discovers its true cost of capital.

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BasisX is an innovative HIP-3 deployment on Hyperliquid. You can find more information about HIP-3 [here](https://hyperliquid.gitbook.io/hyperliquid-docs/hyperliquid-improvement-proposals-hips/hip-3-builder-deployed-perpetuals).