● What is Cash & Carry Arbitrage?
By holding the underlying coin in Spot and simultaneously opening an equal-sized 1x Short Perpetual contract, your position is 100% delta-neutral (immune to price drops or pumps). When funding rates are positive, you receive funding payments every 8 hours directly into your account as pure passive yield.
| Asset | Mark Price | 8h Funding Rate | Estimated APR | Compound APY | Quick Action |
|---|---|---|---|---|---|
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Knowledge Base & FAQ
Understanding Crypto Funding Rate Arbitrage
Everything you need to know about generating delta-neutral passive yields from Binance and Bybit perpetual futures.
What is Crypto Funding Rate Arbitrage? ▼
Funding rate arbitrage is a market-neutral quantitative strategy where a trader captures periodic funding fee payments exchanged between long and short perpetual contracts without exposure to underlying price volatility. Because the position is delta-neutral, whether Bitcoin surges 50% or crashes 50%, your portfolio principal remains insulated while harvesting compounding yields.
How does Cash and Carry Arbitrage work?
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In cash and carry arbitrage:
- You buy \$10,000 worth of Spot asset (e.g. SOL or BTC).
- You simultaneously open a 1x Short Perpetual Futures contract worth \$10,000 of the same asset.
- Because Spot (+1x) and Perp Short (-1x) balance each other, your net directional market exposure is exactly zero.
- Every 8 hours (at 00:00, 08:00, 16:00 UTC), if funding rates are positive, the perpetual shorts receive payments directly funded by the long traders.
Why do Binance and Bybit funding rates differ? ▼
Binance and Bybit maintain distinct order books, margin rules, and liquidity profiles. When speculative retail sentiment is excessively bullish on one exchange while institutional traders dominate the other, funding rates diverge. This creates a riskless spread: a trader can go Long on the exchange with the lower rate and Short on the exchange with the higher rate.
How are APR and APY calculated on Heliosis Terminal? ▼
Perpetual funding settles 3 times daily (every 8 hours, 1095 times annually):
APR = 8h Rate × 3 × 365
APY = (1 + 8h Rate)1095 - 1
APY = (1 + 8h Rate)1095 - 1
When yields are continuously reinvested, APY accounts for compounding returns over 365 calendar days.