Funding rate arbitrage: the cross-exchange pair
A hedged pair is two opposite positions of equal size on the same coin across two exchanges: where funding is extreme you receive it, where it sits near zero you pay it. Price movement is cancelled by the opposing leg, so the income does not depend on where the market went. Below: where the income comes from, what it costs, how break-even is calculated and what that calculation does not know.
Where the income comes from
The spread pays, not the rate
The number that matters is not the rate on one exchange but the SPREAD between exchanges on the same coin. If one shows −0.15%/h and the other −0.02%/h, your income is the 0.13%/h difference, not 0.15%: the short leg receives funding, the long leg pays it.
Why there are two legs
A single leg is a bet on price direction, and the first move will wipe out any funding. A second leg of equal size in the opposite direction removes that risk: what one loses, the other earns. What remains is the funding cash flow.
Exchanges use different intervals
One charges every 8 hours, another every hour, and comparing «percent per interval» between them is meaningless. Everything is normalized to a rate per hour — the only scale on which exchanges are comparable. The radar does this per settlement for you.
Spreads are short-lived
A divergence is not a constant: exchanges recompute funding continuously and the spread collapses. What matters is not its size at a glance but how long it holds — a one-off spike and a persistent divergence look identical in a table and are worth very different things.
The economics: four legs of fees
The cost is one-off, the income is hourly
Opening a pair is two trades, closing it is two more. Four fee legs plus slippage, all paid ONCE. The income, meanwhile, accrues every hour the spread survives. Hence the only honest question: how many hours must the position be held for the spread to repay the entry.
The break-even formula
Cost = 4 × one-side fee + slippage. Break-even in hours = cost ÷ spread per hour. At a typical taker fee of 0.055% and 0.05% slippage the entry costs about 0.27%, and a spread of 0.05%/h repays it in roughly five and a half hours.
What is left after a day
Net per day = spread × 24 − the one-off cost. If a spread does not repay the entry within a day, calling it a pair is premature: the divergence formally exists but will not cover fees even in a week.
Annualized is scale, not a promise
Converting the spread to a yearly figure (× 24 × 365) is convenient for comparing magnitudes, but it assumes the divergence lasts a year. None does. Read it as «how large an anomaly this is», not as a return.
A live example right now
The numbers below are not a textbook case — they are the current state of the market from radar data. Fees are typical taker fees and slippage is conservative; you can set your own in the settings and the maths follows them.
| Coin | Receive on | Pay on | Spread/h | Entry costs | Repays in | Annualized |
|---|---|---|---|---|---|---|
| COW | Bybit | Bitget | 0.2737%/h | 0.270% | 59 min | 2397% |
| WAL | OKX | Binance | 0.1155%/h | 0.270% | 2.3 h | 1011% |
| ACE | Hyperliquid | Bybit | 0.1112%/h | 0.270% | 2.4 h | 974% |
| ONE | OKX | Bitget | 0.0448%/h | 0.270% | 6.0 h | 393% |
| BLUAI | Binance | Bybit | 0.0445%/h | 0.270% | 6.1 h | 390% |
The annualized column is a projection of the current spread, not a return: it assumes the divergence lasts a year, which never happens. Read the break-even column instead. The full list with a persistence column is on the pairs page, where you can see how long each divergence has held.
What this calculation does not know
The rate will change
The rate shown is the exchange's forecast for the next settlement, and it keeps being recomputed until the payout. The spread can vanish before you repay the entry — leaving the four fee legs paid and no income earned.
The legs live separately
Delta-neutrality holds only while both positions live. A sharp move can wipe out margin on one exchange before the other and leave you with open directional risk — exactly what the pair was built to remove.
Money cannot be moved instantly
Collateral sits on two exchanges, and topping up a drained leg means a transfer: time plus a network fee. In a fast move that time may not exist.
Slippage is not guaranteed
The maths uses a slippage buffer, but at an extreme the order book is thin precisely where the interesting rate is: a real entry can cost more than calculated, and an exit more still.
The pair can disappear
Exchanges delist contracts and change settlement intervals, sometimes mid-event. The radar records this, but by then the position is already open.
How it is done
- Find a coin with a divergence: rows in the pairs table are sorted by spread, with how long it has held next to it.
- Check that the spread repays the entry faster than you are willing to hold: the break-even column answers this with a number.
- Make sure the coin is liquid on BOTH exchanges: a thin book on one side will eat the calculated edge through slippage.
- Open two positions of equal size in opposite directions — short where you receive funding, long where you pay it.
- Keep margin headroom on both sides and watch the spread: once it has collapsed, the pair has stopped earning and started costing money.
What this is not
This is not price arbitrage
Cross-exchange arbitrage usually means something else: buy cheaper on one venue, sell higher on another. Here the price does not matter at all — what matters is the difference in funding RATES, and price movement is deliberately cancelled by the second leg.
This is not risk-free income
Delta-neutrality removes directional risk, but not the risk of one leg being liquidated, of the spread collapsing, or of exchange operations. The section above names them one by one.
These are not signals or advice
The radar shows measurable numbers and what follows from them. The decision to open a position, and all responsibility for it, are yours.
Frequently asked
What is funding rate arbitrage in plain terms?
Two opposite positions of equal size on the same coin across two exchanges. Where the funding rate is extreme you receive it; where it is near zero you pay it. Price is cancelled by the opposing leg, and the income equals the difference between the rates normalized per hour.
How much can be earned on it?
As much as the spread yields over the holding time, minus four fee legs and slippage. A 0.05%/h spread against a 0.27% entry repays in about five and a half hours, and everything after that is net — while the divergence lives. Annualizing is fine for scale; holding for a year is not a thing.
Why not simply take the exchange with the highest rate?
Because a single leg is a bet on price direction. Any move overwhelms funding: a 0.1%/h rate is 2.4% a day, while a coin can easily travel 10% in an hour.
How is a hedged pair different from cross-exchange arbitrage?
Price arbitrage earns on the difference in PRICES between exchanges. A hedged pair earns on the difference in funding RATES, and a price difference only gets in its way — which is why the second leg neutralizes it.
Do I need exchange API keys to use the radar?
No. The radar reads only public exchange data, places no trades and has no access to accounts. You open positions yourself on your own exchanges.