Funding Rate Arbitrage

Core idea

Funding-rate arbitrage combines spot and perpetual-futures positions to collect a funding differential while reducing price direction. The return depends on funding persistence, basis movement, margin, and venue reliability.

Implementation

Expected funding must exceed trading fees, financing costs, collateral drag, and basis variation.

Primary risk

Funding can reverse quickly while leverage and liquidation mechanics amplify losses.

Frequently asked questions

What is funding rate arbitrage?

Funding-rate arbitrage combines spot and perpetual-futures positions to collect a funding differential while reducing price direction. The return depends on funding persistence, basis movement, margin, and venue reliability.

What is the main risk of funding rate arbitrage?

Funding can reverse quickly while leverage and liquidation mechanics amplify losses.