One day without learning is like three autumns apart; have you all learned the arbitrage knowledge shared earlier? Have you aggressively taken advantage of the market's opportunities and cashed in on it?
But looking at the comments section, some friends still look confused: What is hedging? What is the funding rate? Arbitrage sounds like mysticism?
Don't worry! Chimes classroom is starting! In the next few sessions, we will not only explain the principles but also provide examples (examples, not chestnuts), ensuring everyone understands and can get hands-on!
📚 This issue's content: Contract funding rate arbitrage, allowing you to 'earn transaction fees while lying down'!
In simple terms, it is to take advantage of the differences in funding rates between different exchanges to do a 'buy low sell high' and earn money from the platform!
Contract funding rate arbitrage is divided into two situations based on settlement time, let's discuss slowly:
✅ Situation 1: Same settlement time, different rates
It's like two milk tea shops, one has no promotion, and the other is buy one get one free—of course you choose the latter!
For example:
WCT contract on Exchange A, funding rate is -1%
At the same time on Exchange B, funding rate is -0.5%
Operation:
Open a short in Exchange B, you 'pay' 0.5% funding fee every hour
At the same time, open a long position in Exchange A, you 'receive' 1% funding fee
✅ Situation 1: Same settlement time, different rates
It's like two milk tea shops, one adds pearls for free, and the other adds pearls and gives a coaster—of course you choose the latter!
For example:
WCT contract on Exchange A, funding rate is -1%
At the same time in Exchange B, the funding rate is -0.5%
Operation:
Open a short in Exchange B, you 'pay' 0.5% funding fee every hour
At the same time,open a long position in Exchange A, you 'receive' 1% funding fee
Result:
Income: 1%
Expenditure: 0.5%
Gross profit = 1% - 0.5% = 0.5%
Don't be too happy! You also need to consider transaction fees:
Generally speaking, exchanges will charge fees based on maker or taker orders, around 0.1%. After deducting transaction fees, the profit is pure profit!
✅ Situation 2: Same rate, different settlement times
This trick is even more sly, called 'time difference arbitrage.'
Example:
Exchange A funding rate -0.5%, settlement time: 16:00
Exchange B funding rate -0.5%, settlement time:13:00
At first glance, both are -0.5%, feeling no opportunity? Don't rush!
Our operation is:
Open a long position in Exchange B (receive -0.5% funding rate, which means you can 'earn' 0.5%)
At the same time, open a short position in Exchange A (but note, it won’t settle until 16:00, so there is currently no charge or payment)
Result:
Exchange B: +0.5%
Exchange A: 0
Total profit:0.5% - 0 = 0.5%
In a nutshell: Others can see the rates but not the time; if you can see the time, you can earn the price difference!
The key point is here❗️
It's easy to talk but hard to practice; the above is all hypothetical, the main event is here! Why does Chimes use $WCT as an example?
Of course, that is the homework for everyone! The left image (Binance), the right image (OKEx), carefully observe the contract funding rates of the two, which situation do they belong to? Only through practical experience can knowledge be consolidated!
🔔 In summary:
As long as the 'rate' or 'time' is different between exchanges, we have the opportunity to arbitrage; hedge locking, guaranteed profit (of course, the premise is that you understand clearly and are skilled at operating)!
