What are basis and spread convergence
The basis is how far a perpetual trades from its spot price. A basis or a cross-exchange spread that has opened up tends to narrow again, which is called convergence. This page explains where convergence comes from and how to read it with the open and close spreads.
Basis
The basis is the perpetual price minus the spot price, as a percentage of spot. A perpetual above spot trades at a premium and the basis is positive. Below spot it trades at a discount and the basis is negative.
On the Spot-perp arbitrage tab of the Funding rate page, Z Market Lab measures the basis at executable prices: the spread between buying spot at the best ask and selling the perpetual at the best bid, as a percentage of the spot price. It is also the Open spread of the Long spot / Short perpetual pair. The basis in Rate overview and in coin details uses a reference price built from each venue’s mid price, not executable prices.
Where convergence comes from
Funding rate: when a perpetual trades at a premium, its funding rate is usually positive. Longs pay every period, and that cost pushes the perpetual price back toward spot.
Arbitrage: trades that buy the cheaper side and sell the richer side pull the two prices together.
Convergence has no schedule. After entry the spread or basis can widen further, and the position shows an unrealized loss until it narrows.
Reading convergence with two spreads
You capture the open spread at entry and give up the Close spread at exit. At any one moment the close spread is at or above the open spread. The distance between them is the round-trip spread. It comes from the bid-ask spreads on the two books, and the market monitor shows it in the Gap % column.
So the spread has to fall by more than that distance before the spread part is positive. Example: the open spread is 0.30% while the close spread is 0.36%. Later the close spread falls to 0.05%, and the spread part is about 0.30% − 0.05% = 0.25%, before fees.
What is a cross-exchange spread explains how both spreads are priced.
Convergence and triggers
A ZML Trade combo expresses convergence with two parameters. It opens while the spread is at or above the Open trigger, and with a position open it closes while the spread is at or below the Close trigger. Both can be negative, and the Open trigger must be higher than the Close trigger. See Parameters.
Each opportunity in Z Market Lab comes with spread history, which shows the range the pair’s spread has moved in.