Funding Rate Arbitrage Calculator
DELTA-NEUTRAL · BASIS TRADE · ANNUALIZED YIELD
Calculate profit from capturing funding rate differentials between exchanges.
+ you pay · − you receive
+ you receive · − you pay
How to use the funding arb calculator
- Enter the current funding rate on Exchange A (where you will short) and Exchange B (where you will long).
- Set your position size and the transfer fee to move funds to the second exchange.
- Set the intended holding period in days.
- Read the annualized yield, net profit, daily income and break-even days.
How funding rate arbitrage works
The strategy is delta-neutral: you open equal long and short positions simultaneously:
- Long leg: buy perpetual futures on the exchange with the lower funding rate (you pay less).
- Short leg: short perpetual futures on the exchange with the higher funding rate (you receive more).
- Net income = (shortRate − longRate) × positionSize × periodsPerDay.
- Since both legs cancel directional risk, profit depends only on the rate spread.
Worked example: Binance vs Hyperliquid BTC arb
- Binance short rate: 0.07%/8h · Hyperliquid long rate: 0.02%/8h · Size: $50,000 · Transfer: 0.1% · Hold: 14 days
- Net rate per interval = 0.07% − 0.02% = 0.05%
- Income per interval = $50,000 × 0.0005 = $25
- Daily income (3 intervals) = $75
- Transfer cost = $50,000 × 0.001 = $50
- 14-day gross = $75 × 14 = $1,050
- Net profit = $1,050 − $50 = $1,000
- Annualized yield = ($1,000 / $50,000) × (365/14) × 100 ≈ 52.1%
- Break-even = $50 / $75 ≈ 0.7 days
The transfer cost is recovered in under a day. The main risk: funding rates can drop or flip, ending the opportunity before you expected. Monitor both rates daily and be prepared to close both legs if the spread narrows.
Key risks to account for
Rate convergence is the primary risk: when many traders pile into the same arb, rates equalize and the spread disappears. Liquidation risk on either leg requires maintaining adequate margin buffers. Counterparty risk (exchange withdrawal freezes) can trap one leg. Always size each leg conservatively (typically 2–3× the minimum maintenance margin) and treat annualized yields as theoretical maximums, not guarantees.
Planning to hold this spread a while? Use the Compound Funding Calculator to project reinvested income, or the Hedge Ratio Calculator if one leg needs to hedge an existing spot position instead of a fresh short.
Check the margin side before you open both legs
Funding arb still carries per-leg liquidation risk. Run a full pre-trade check on the short leg's size, leverage, and liquidation distance:
Run Pre-Trade Risk Check →Use via API or MCP
Annualized yield, net profit, and break-even days are available as a deterministic API call: wire it into a rate-scanning bot or an AI agent that monitors funding spreads across exchanges.
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What is funding rate arbitrage in crypto?
Funding rate arbitrage (also called basis trading) is a delta-neutral strategy where you hold a long perpetual position on one exchange and a short on another to capture the difference in funding rates. Because both legs cancel out directional risk, profit comes purely from the rate spread.
How is annualized yield calculated?
Annualized yield = (Short Rate − Long Rate) × periods per day × 365. For an 8h interval with a 0.07% net rate per period: 0.07% × 3 × 365 ≈ 76.65% APY. The calculator does this automatically for both 8h (standard) and 1h (Hyperliquid) intervals.
What is the transfer fee and when does it matter?
To open the arbitrage you must transfer funds to a second exchange, typically costing 0.05–0.1% of position size. The calculator deducts this from net profit and shows how many days it takes to break even: if breakeven exceeds your intended hold duration, transfer costs outweigh the funding income at those rates.
What are the risks of funding rate arbitrage?
The main risks are: (1) funding rates can change or flip negative, (2) liquidation on one leg if the exchange's margin engine moves against you, (3) counterparty risk if an exchange is illiquid or freezes withdrawals. Always size each leg conservatively and monitor both positions.