Arbitrage
Simultaneous buying and selling of same asset on different markets for risk-free profit.
Arbitrage is a strategy exploiting price differences of the same asset on different markets — buy cheap on one, sell high on another, earn the difference.
Types of crypto arbitrage:
1. Exchange arbitrage • BTC costs $60,000 on Binance, $60,100 on Coinbase • Buy on Binance, transfer, sell on Coinbase • Limitation: transfer time, fees, KYC
2. Triangular arbitrage • BTC → ETH → USDT → BTC on same exchange • If prices are out of equilibrium, profit is made
3. DEX-CEX arbitrage • Price difference between DEX (Uniswap) and CEX (Binance) • Flash loans enable this without initial capital
4. Funding rate arbitrage • Long spot BTC + Short perp BTC • Earn funding rate if positive
Why it's hard for retail: