Spot Arbitrage

Definition

In Spot/Futures arbitrage, the investor will:

• Borrow at a lower rate, and lend/stake at a higher rate

How Coinsight Can Help

• Identifying an opportunity

  • Get current data for multiple lending markets in a single view

  • Get historical data for lending markets to see if the strategy is feasible in the long term

Analysis and Examples

Polkadot for example has consistently average 1-2% borrowing rates on OKX, and it can be staked for up to 14% a year, according to Staking Rewards. Spot arbitrage via loans is often the simplest to perform, as it doesn’t require buying or selling. This can often be seen as trading liquidity, where an investor accepts a lower interest rate for a flexible deposit, and another investor can then borrow cheaply to lock the funds in staking.

In this case, an investor could deposit $100 in OKX, borrow $60 worth of DOT and stake it. They would earn around 12% on the borrowed amount, equivalent to a 7.2% yield on the initial amount.