What Is Crypto Arbitrage? Types, Examples and Real Costs

Crypto arbitrage is a trading strategy that profits from differences in the price, or the funding rate, of the same asset on different markets, while keeping exposure to the asset's price close to zero. The classic form is simple: buy where it is cheaper, sell where it is more expensive. In practice, the profit is whatever is left after fees, slippage and transfer costs.

Key takeaways

• Arbitrage exploits price or rate gaps for the same asset across venues.
• Main types: cross-exchange (spatial), funding rate, CEX-DEX, DEX-DEX and triangular.
• Net profit is what matters: gross spread minus fees, slippage, gas, withdrawal and bridge costs.
• Big gaps on major coins close in seconds; persistent opportunities are usually in funding rates and less liquid markets.
• Arbitrage is low-risk, not risk-free.

Types of crypto arbitrage

Type	How it works	Main costs and risks
Cross-exchange (spatial)	Buy on exchange A, sell on exchange B	Trading fees, withdrawal fees, transfer time
Funding rate arbitrage	Short the perp with high funding, long the perp or spot with low funding	Fees, basis changes, liquidation of one leg
CEX-DEX	Trade the gap between a centralized and a decentralized exchange	Gas, DEX price impact, deposit/withdrawal delays
DEX-DEX	Trade the gap between two DEX pools, possibly on different chains	Gas, price impact, bridge fees and bridge risk
Triangular	Cycle through three pairs on one exchange (e.g. USDT → BTC → ETH → USDT)	Fees on three trades, speed

Worked example: cross-exchange arbitrage

A token trades at $100.00 on Exchange A and $100.60 on Exchange B. You trade $10,000.

Item	Amount
Gross spread (0.60%)	+$60.00
Taker fee on buy (0.10%)	−$10.00
Taker fee on sell (0.10%)	−$10.06
Withdrawal fee	−$2.00
Slippage (0.10% total)	−$10.00
Net profit	≈ +$27.94

The gross spread was 0.60%, but the net return is closer to 0.28%, and the price can move while funds are in transit. Pre-funding both exchanges avoids the transfer delay but ties up more capital.

Worked example: funding rate arbitrage

BTC funding is 0.03% per 8h on Exchange A and 0.00% on Exchange B. You short $10,000 of BTC perps on A and go long $10,000 on B, then hold for 7 days.

Item	Amount
Funding received on A (0.03% × 21 payments)	+$63.00
Funding paid on B (0.00%)	$0.00
Taker fees, 4 fills × $10,000 × 0.05%	−$20.00
Net profit before slippage	≈ +$43.00

That is about 0.22% per week on $20,000 of total margin, roughly 11% APR, with no directional BTC exposure. The risks are that funding rates converge or flip, the price basis between the two perps changes, and a sharp move liquidates one leg if it is under-collateralized. See liquidation.

The costs that decide net profit

1. Trading fees: maker vs taker rates on every fill.
2. Slippage and price impact: large orders move thin order books and DEX pools.
3. Withdrawal and deposit fees, plus minimum withdrawal sizes.
4. Gas fees on DEX trades, which vary with network congestion.
5. Bridge fees and bridge risk for cross-chain trades.
6. Transfer time: prices can move while funds are in transit.
7. Wallet status: exchanges sometimes suspend deposits or withdrawals for a token, which makes an opportunity impossible to execute.
8. Counterparty risk: funds held on an exchange are exposed to that exchange.

Why arbitrage opportunities exist

• Fragmented liquidity across hundreds of CEXs, DEXs and chains.
• Different traders on different venues, for example retail-heavy exchanges vs professional ones.
• Different funding formulas and intervals between exchanges.
• Friction: slow withdrawals, suspended wallets and bridge delays keep prices from converging.
• Same-ticker confusion: two unrelated tokens can share a ticker, so real spreads must be verified by contract address.

How ArbTide helps

ArbTide collects prices and funding rates from every tracked CEX and perp DEX server-side, and shows the best spot and perpetual route for every coin with the net spread after taker fees and the size available at the top of the book. See the live arbitrage scanner, a single coin like BTC, the cash and carry scanner, every arbitrage strategy or live funding rates.