Futures and funding rate arbitrage bot

Futures arbitrage

Price arbitrage

The basis of arbitrage strategies is price divergence - spread. This is the difference between the cost of the same asset in different parts of the market, for example between spot and futures. It is this price mismatch that forms the basis of profitability.

In practice, the scheme looks like this: a trader buys an asset on the spot or futures market where it trades cheaper, and simultaneously opens a short position on futures where the price is higher. The gap between the two prices is the potential profit. When spot and futures quotes align, positions are closed and the difference is fixed as income.

Funding rate arbitrage

Price convergence is ensured, among other things, through the funding rate. This is a mechanism that regularly redistributes funds between market participants - longs and shorts - motivating them to open or close positions to maintain price equilibrium. The payout amount is updated several times a day, and during periods of strong market fluctuations it can be adjusted more frequently.

The funding rate can serve as a separate source of profit. If a trader is in a short position with positive funding, they receive payments from those holding long positions. With a negative rate, the situation is reversed.

Funding-only arbitrage involves opening opposite positions when the asset price maintains correlation, but the funding rate on two exchanges differs