You buy a cryptocurrency at a lower price on one exchange and sell it at a higher price on another, locking in a risk-free (or low-risk) profit.
> Example:
BNB is $680 on Binance, but $688 on KuCoin.
→ Buy on Binance, transfer, and sell on KuCoin.
→ Profit: $8 per BNB (minus fees).
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🔑 Types of Arbitrage:
Type Description
Spatial Arbitrage Buy on one exchange, sell on another
Triangular Arbitrage Exploit inefficiencies between 3 pairs on the same exchange (e.g., BTC/ETH, ETH/BNB, BTC/BNB)
Statistical Arbitrage Uses algorithms/models to spot temporary pricing inefficiencies
Cross-border Arbitrage Exploit price gaps in different regions/countries (e.g., Korean Premium)
Decentralized Arbitrage Use price differences between DeFi (like Uniswap) and CEXs (like Binance)
