Funding rate arbitrage is a market-neutral trading strategy that aims to profit from the difference in funding rates for the same perpetual futures contract across different exchanges. The core idea is to simultaneously open a long position on an exchange with a low or negative funding rate and a short position of the same size on an exchange with a high positive rate. This way, you earn more in funding payments than you pay out, capturing the difference as profit regardless of the asset's price movement.

A delta-neutral strategy is designed to have zero net exposure to the price direction of an asset. Here's how it's executed:

1. Identify Opportunity: Using our tool, you find that the BTC/USDT funding rate on Exchange A is +0.05% (longs pay shorts) and on Exchange B it's -0.01% (shorts pay longs).
2. Execute Trades: You simultaneously open a short position on 1 BTC on Exchange A and a long position on 1 BTC on Exchange B.
3. Profit Mechanism: On Exchange A, you will receive the 0.05% ㅤfunding payment. On Exchange B, you will also receive the 0.01% ㅤpayment. Your total profit per funding interval is the sum, 0.06% ㅤ, minus fees. Since your long and short positions cancel each other out, you are not affected if the price of Bitcoin goes up or down.

The APR is a projection of the annual return on an arbitrage opportunity, assuming the current funding rate spread remains constant for a year. It's calculated by taking the rate difference (e.g., per 8 hours), multiplying it to get a daily rate, and then multiplying by 365.

Important: APR is a theoretical metric for comparing opportunities. Actual returns will vary because funding rates change frequently. It should be used as an indicator of current profitability, not a guaranteed annual income.

While market-neutral, this strategy is not risk-free. Key risks include:

• Execution Risk (Slippage): Price can move between the moments you place your long and short orders, resulting in an imperfect hedge.
• Fee Impact: Trading fees (for opening and closing both positions) can significantly reduce or negate small profits. Always factor them into your calculations.
• Funding Rate Fluctuation: The profitable spread you identified can shrink, disappear, or even reverse after you've opened your positions.
• Liquidation Risk: Extreme price volatility can still lead to liquidation on one leg of your trade if you don't maintain sufficient margin across exchanges or trading pairs.

• The 'Current' mode shows arbitrage opportunities based on the very latest funding rates. It is designed for traders who want to execute a strategy immediately.
• The 'Historical' mode calculates the cumulative arbitrage profit over a selected period, such as 30 days. It is a powerful tool for analysis and backtesting, helping you identify assets and exchange pairs that have demonstrated a stable and consistently profitable arbitrage spread over time.