Funding-rate arbitrage: earn funding without betting on price

Funding-rate arbitrage means holding the same coin short on one exchange and long on another, in equal size. Price moves cancel out, and you keep the difference in funding between the two exchanges.

A worked example

Coin X pays 30% a year to shorts on exchange A and 5% a year on exchange B. You short $1,000 of X on A and buy $1,000 of X on B.

• You receive about 30% a year on the short and pay about 5% a year on the long: a gap of about 25% a year on each side's $1,000, about $250 a year.
• That is roughly $20 a month, before fees. On the $2,000 of positions it is 12.5% a year. With 3× leverage the margin behind both legs is about $667, so the return on the money you put up is about 37% a year (and the liquidation risk is higher).
• If X rises 10%, the long gains about $100 and the short loses about $100. Your funding income continues.

What it costs

You pay trading fees to open and close both legs, four trades in total. Limit (maker) orders are much cheaper than market (taker) orders, and on many pairs they decide whether the trade is worth it at all. Count every pair after entry and exit fees, and how many days of funding it takes to pay them back.

The real risks

• The gap can close or flip. Funding changes every period. Exit when the gap fades.
• Liquidation. Each leg sits on a different exchange with its own margin. A sharp move can liquidate one side if leverage is too high. Keep leverage low and margin healthy on both exchanges.
• Execution. If one leg fills and the other does not, you are briefly exposed to price.
• Exchange and smart-contract risk. You deposit into your own account on each exchange and withdraw to your own wallet. While it is there, it sits in that exchange's smart contracts, and an exchange can fail, be hacked, pause withdrawals or change its rules. Spread your capital.

How to start

1. Open accounts on two exchanges that list the coin, and fund both.
2. Pick a pair with a gap that has held for days, not minutes, and enough volume for your size.
3. Open both legs in the same size, ideally with limit orders.
4. Check daily. Close both legs together when the gap fades.

Rivemont runs bots on Hyperliquid only, so it does not trade a pair across two exchanges for you. On Hyperliquid you can follow every coin's funding on the funding page and run your own bots.