In futures trading, basis trading is the trade between the spot and futures price of an asset. This is also known as a cash-and-carry trade. The difference in the spot and futures price of an asset is known as the basis. If a trader expects the price of an asset to increase they will “long the basis”. If a trader expects the price of an asset to decrease they will "short the basis". When the spot price of an asset increases, the futures price will be higher than the spot price. This is known as contango. When the spot price of an asset decreases, the futures price will be lower than the spot price. This is known as backwardation. flexUSD earns its APY by tokenizing basis trading, which means CoinFLEX uses trading bots to look for the best opportunities and algorithmically trade basis in our repo orderbooks. Before flexUSD, traders would manually arbitrage between the different Repo pairs. However, this is difficult so we automated the process for them, leading to the creation of flexUSD.