This seal 🦭 has been busy these days, researching and practicing funding fee arbitrage.
First, let me briefly explain that funding fee arbitrage refers to opening opposite positions in equal amounts of spot and contract when the contract funding fee is relatively high. This way, the profits and losses of the spot and contract largely offset each other, specifically targeting the contract funding fee.
If the funding fee is positive, it is a positive arbitrage, and usually the contract price is higher than the spot price. Buy the spot and hold the position, then open an equal-sized short position in the contract; when the spot and contract prices converge, close both positions.
Conversely, if the funding fee is negative, it is a negative arbitrage, and usually the contract price is lower than the spot price. Borrow tokens to sell the spot for USDT, then open a long position of equal size; when the spot and contract prices converge, close the contract, and use USDT to buy the spot again and return it.
Negative arbitrage requires paying borrowing interest, making it more complex to operate, and often facing the awkwardness of being out of stock 😅
The operations I practiced this time, $0G and $FLOW , are both negative arbitrage. It's not that I enjoy challenging difficulties, but the market hasn't provided me with opportunities for positive arbitrage these days.
0G arbitrage (2025-12-28 23:58:51～2026-01-01 01:02:42)
Profit and loss
Total profit and loss in the contract: 61.51131662
Among them, the capital fee incurred was: 70.96980329
Total profit and loss in the spot market (including borrowing interest): -96.462
Total profit and loss: -34.951😭
Review and summary
Binance opened a long position in the contract, but neither the collateral borrowing nor the spot leverage can borrow 0G. After searching the entire internet, only the neighboring exchange starting with 'b' can pledge to borrow.
The main reason for such significant losses is that the borrowing rate for the neighboring pledge is too high, and the rate fluctuates greatly, ranging from an annualized 100% to 1500%, collected once an hour, for a total borrowing of 75 hours with an average annualized interest rate of:
(127.98639052+1200-1230)/1230/75*24*365 = 930.472%
Meanwhile, the annualized capital fee for the contract was only 70.96980329/(1230* 0.975807)/75*24*365 = 690.633%, which is indeed quite high, but...
Actually, the neighboring exchange can adopt a fixed-rate borrowing method for 7 days, but I was overconfident and didn’t operate. By the time I wanted to operate, it was already too late, resulting in a severe loss 🙉😭
FLOW arbitrage (2025-12-28 15:36:22~ 2025-12-30 03:59:33)
Profit and loss
Total profit and loss in the contract: -71.42141904
Among them, the capital fee incurred was: 8.66557336
Total profit and loss in the spot market (including borrowing interest): 59.19
Total profit and loss: -12.231😭
Review and summary
The borrowing interest is not high; once the Binance spot leverage was opened, I couldn't borrow, and borrowed directly from the Binance collateral loan.
The contract suffered significant losses, but the profits from the spot market are insufficient, and the price fluctuations in the spot market cannot offset the contract.
Halfway through the arbitrage, I learned that the flow currency was attacked by hackers in the past two days, and all major exchanges stopped deposits and withdrawals, making it effectively a single machine coin, so I immediately closed the position and stopped the arbitrage.
Additionally, during the arbitrage period, although the capital fee was negative, the contract price was consistently higher than the spot, which is actually quite abnormal.
I will absolutely not touch currencies with such fundamental problems next time.
Conclusion
Overall, my first operation of capital fee arbitrage has not deformed. Although I incurred losses, I gained valuable experience.
Especially 0G, if I had locked in the borrowing rate in advance, I could have made a small profit.
In the future, I will continue to operate and keep sharing and reviewing. Welcome to support with a one-click triple like.
Many people have asked me how to calculate Binance's scattered capital fees. I will soon release a tutorial. Purely mobile operation, no need to struggle with Excel on a computer. This seal has not touched a computer for almost a year; daily operations and coding are done on the iPhone. Stay tuned.
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