Getting started
Basis
Basis is the difference between what a Stock Token costs onchain and what it should cost based on the equity it tracks, expressed as a percentage.
The formula
Basis % = (Onchain Price - Reference Price) / Reference Price x 100The reference price here is always the normalized reference: the underlying equity price after the token multiplier has been applied. Comparing a raw equity price to a token price produces a number that is pure arithmetic error. See Pricing.
Premium
The token costs more onchain than the equity says it is worth.
| Input | Value |
|---|---|
| Reference normalized price | $100.00 |
| Executable Stock Token price | $102.00 |
| Basis | +2.00% |
(102.00 - 100.00) / 100.00 x 100 = +2.00%The Stock Token is trading at a 2% premium.
Discount
The token costs less onchain than the equity says it is worth.
| Input | Value |
|---|---|
| Reference normalized price | $100.00 |
| Executable Stock Token price | $98.00 |
| Basis | -2.00% |
(98.00 - 100.00) / 100.00 x 100 = -2.00%The Stock Token is trading at a 2% discount.
Why Kavo uses the executable price
Kavo computes the basis against the price a real trade fills at, not against a displayed mid. The two can differ a great deal in a thin pool: a market can be marked at one level and still move several percent against you the moment you touch it.
A displayed price you cannot trade at is not a price
If a basis is computed from a mid-price, it describes an opportunity that may not exist at any size. Kavo quotes the trade first and derives the basis from that quote, so the number you see is the number you could act on.
Size matters
Because the executable price depends on how much you are trading, the basis does too. A market can show an attractive gap on a small clip and none at all on a larger one. Kavo quotes the table at a fixed reference size and re-quotes at your own size in the trade panel, so you can see both.
Thin and dislocated markets
A large basis on an empty pool is not an opportunity. Kavo flags two cases so they can be read for what they are rather than filtered out silently:
- Thin: the market cannot absorb a small reference clip without material price impact.
- Dislocated: the pool price sits so far from the equity that it reflects dormant or stale liquidity rather than a live view.
Both are ranked below genuinely tradable markets in the default ordering, and both remain visible.