FAQ - Funding Rate Arbitrage Dashboard

Perp DEX Meta

Trading on perpetual DEXs offers significant advantages beyond just funding rate arbitrage. Many perpetual DEXs are running points programs and reward systems that can dramatically boost your returns.

                Why This Matters: Funding rate arbitrage can generate consistent returns as additional income while having no directional exposure to market movements. You accumulate points/rewards that can result in substantial airdrops.
            

Hyperliquid as the Example

Hyperliquid's Season 1 airdrop rewarded active traders with significant HYPE token allocations as an example of how valuable these programs can be. A potential Season 2 airdrop could provide further upside for continued participation.

Current Points Programs

Hyperliquid S2 (speculative)
Lighter
Extended
Paradex
And more

What is Funding Rate Arbitrage?

Funding rate arbitrage is a delta-neutral trading strategy that profits from differences in funding rates across perpetual futures exchanges, without taking directional market risk.

In perpetual futures markets, traders pay or receive a funding rate every 1 hour (4 or 8 hours on some exchanges) to keep the perpetual contract price in line with the spot price. If the rate is positive, longs pay shorts. If the rate is negative, shorts pay longs.

                The Strategy:
                Open a long position on the exchange with the lowest (or most negative) funding rate
Open an equal-sized short position on the exchange with the highest (or most positive) funding rate
Collect the spread between the two funding rates as profit
Your positions cancel out directionally, so you're market-neutral (no exposure to price movement)

            

How to Read the Dashboard

The dashboard attempts to identify relatively stable opportunities by averaging funding rates over time. Note that this tells you how the opportunity has performed over that timeframe in the past which is no guarantee for a positive return in the future.

Understanding the Columns

Column	Description
Market	The cryptocurrency/asset being traded (e.g., BTC, ETH)
Timeframe	The averaging period: 1d (1 day), 3d (3 days), 1w (1 week), 1m (1 month)
Spread	The annualized profit potential (%). This is the difference between short rate and long rate.
Long @	The exchange where you should open a long position (lowest funding rate)
Short @	The exchange where you should open a short position (highest funding rate)
Long Rate Avg	Average annualized funding rate (%) on the long exchange over the timeframe
Short Rate Avg	Average annualized funding rate (%) on the short exchange over the timeframe
Min OI	Minimum open interest (in USD) between the two exchanges.
Trend	Spread direction: `widening` (1d rate > 3d rate), `stable` (consistent), or `narrowing` (1d rate < 3d rate)

Using the Filters

Market: Filter for a specific cryptocurrency
Timeframe: Choose which averaging period to view
Trend: Filter for widening, stable, or narrowing spreads
Min Spread: Set the minimum annualized spread % to display

Interactive Features

Click on any row in the table to open a detailed historical spread visualization showing how the funding rate spread has evolved over time between the two exchanges.

Risk Considerations

⚠️ Important: Funding rate arbitrage is not risk-free. Please understand these risks before trading.

Key Risks

Execution Risk: Prices may move between opening your long and short positions, creating temporary imbalance
Liquidation Risk: If using leverage, one side could get liquidated during volatile price movements despite being hedged
Funding Rate Changes: Funding rates are dynamic and can reverse quickly, turning profitable spreads into losses
Exchange Risk: Counterparty risk, exchange downtime, withdrawal delays, or different margin requirements
Slippage: Large positions may experience slippage when entering/exiting, especially in low liquidity markets
Basis Risk: The perpetual contract prices on different exchanges may diverge temporarily
Capital Efficiency: You need capital on both exchanges, and margin requirements may differ

Best Practices

Start with small position sizes to understand the mechanics
Monitor positions actively - don't set and forget
Keep extra margin buffer on both exchanges for volatility
Consider transaction costs (fees, withdrawals) when calculating profitability
Pay attention to the Min OI column - don't size beyond it
Favor opportunities with stable or widening trends

How Often is Data Updated?

The dashboard data is updated hourly.

Check the "Last Updated" timestamp at the top of the dashboard to see when data was last refreshed. The timestamp is shown in UTC time.

                Note: Funding rates can change quickly in real-time. Always verify current rates on the exchanges before executing trades.
            

Understanding the Metrics

What is a "good" spread?

Spreads are shown as annualized percentages. Here's a general guide:

10-25%: Good (grey)
25-50%: Great (green)
50%+: Excellent (blue)

Remember to subtract trading fees, withdrawal costs, and funding payment fees when calculating your actual profit.

Why multiple timeframes?

Different timeframes help you understand spread stability:

1d: Shortest term trend
3d: Short-term trend - helps confirm if 1d is an outlier
1w: Medium-term average - indicates more stable opportunities
1m: Long-term baseline - shows historically consistent spreads

Opportunities that appear across multiple timeframes with stable or widening trends are generally more reliable.

In Development

We are planning to add many more exchanges as soon as possible, with Hyperliquid being first in line.

Support for open interest (OI) will be added to help assess market depth and liquidity.

📚 Frequently Asked Questions