Let me share a money-making rule: $CKB is a typical popular token in the Chinese area, so it will be more actively traded on Binance, and the price will be 2%-0.1% higher than that on foreign exchanges (such as South Korea and the United States) (the price difference during the Mid-Autumn Festival surge is more than 10%). This is the basis of our arbitrage. I usually start two-way arbitrage when the price difference is about 1%.
For example, the current price of CKB on Binance is 0.0131U, and on a certain foreign exchange (you can compare it yourself), the price of CKB is 0.0127U. The price difference has reached the predetermined price. Buy on the lower side, do contract hedging at the same time, then sell the coin at a high price across exchanges, and close the hedging contract at the same time.
The main risk point is if prices experience sharp fluctuations; on one hand, a high leverage on the hedging contract can lead to liquidation (therefore leverage should not exceed 10), and on the other hand, if prices fluctuate too quickly, the price difference may disappear, resulting in losses (the solution is simple: follow me for the next share).
I have summarized a rough idea:
In simple terms, it involves transferring assets between different trading platforms, exploiting price differences to buy and sell, thereby obtaining profits.
1. Introduction to CKB
CKB is the native token of the Nervos network, a decentralized blockchain platform aimed at solving the scalability of traditional blockchains and the flexibility issues of smart contracts. CKB tokens are rewarded to mining nodes that participate in maintaining and securing the network through the Proof of Work (PoW) consensus algorithm. Users holding CKB tokens can not only pay transaction fees but also participate in network governance, such as protocol upgrades and modifications to governance rules. Additionally, CKB tokens can be used as a store of value and payment method for decentralized applications (DApps) and smart contracts.
CKB, as an ideal Layer 2 scaling solution for Bitcoin, showcases its unique technical advantages and significant characteristics. CKB combines PoW (Proof of Work) and UTXO (Unspent Transaction Output), a design that not only inherits the security and decentralization features of Bitcoin but also enhances the transparency and traceability of transactions through the UTXO model.
One of CKB's technical highlights is the RGB++ protocol, which significantly enriches the asset types on CKB and supports the issuance and circulation of multiple assets. RGB++ achieves direct interoperability between Bitcoin assets and CKB chain assets through an innovative 'isomorphic binding' mechanism, breaking down traditional barriers to asset issuance and cross-chain circulation.
Moreover, CKB has strong cross-chain interoperability, allowing seamless interaction with other UTXO chains (like Bitcoin's Lightning Network), further expanding CKB's application scenarios and ecological potential.
2. Principle of Arbitrage
The principle of arbitrage is simple: exploit price differences between different exchanges, buying low and selling high. Due to delays in information transmission between exchanges or differences in trading volume and liquidity, the same asset can have different prices across exchanges. Arbitrageurs monitor these price differences and quickly execute buy and sell operations to profit.
3. CKB Arbitrage Process
Market research: First, it is essential to have a basic understanding of the market situation of CKB, including its prices, trading volumes, and liquidity across different exchanges. This step can be completed using professional cryptocurrency market websites or apps.
Choose exchanges: Select two or more exchanges that have CKB trading and price differences. These exchanges can be centralized or decentralized. When choosing, consider factors such as the exchange's reputation, fees, and transaction speed.
Open an account: Open an account at the selected exchanges, and complete identity verification and fund deposit. This step is necessary preparation before arbitrage.
Fund allocation: Reasonably allocate funds to each exchange to enable swift buy and sell operations upon discovering price differences.
Monitor prices: Use professional price monitoring tools or software to keep an eye on CKB price changes across different exchanges in real-time. This step is crucial in the arbitrage process, requiring a high level of alertness and reaction speed.
Buying and selling operations: Once a price difference reaches the predefined arbitrage space, immediately conduct buy and sell operations. For example, buy CKB at a low price on Exchange A, then sell it at a high price on Exchange B to obtain profits.
Repeat operations: Depending on market conditions, multiple arbitrage operations can be conducted daily. The mentioned ten times a day with a stable profit of 1.5% is achieved based on such repeated operations.
4. Beginner Arbitrage Experience Sharing
As a beginner, I have accumulated some experience in arbitrage trading, which I would like to share as follows:
Carefully choose exchanges: Always select exchanges with a good reputation, reasonable fees, and fast transaction speeds. This can reduce trading risks and improve arbitrage efficiency.
Reasonably control risks: Although arbitrage can yield stable profits, there are certain risks involved. Therefore, it is essential to control risks reasonably during operations, avoiding blind following or excessive trading.
Stay calm: When discovering price differences, remain calm and rational, and don't rush into action. It can be wise to observe for a period to confirm whether the price difference is stable before proceeding.
Continuous learning: The cryptocurrency market is unpredictable; to succeed in arbitrage, one needs to continuously learn new knowledge and skills, improving market analysis and judgment capabilities.
Cross-exchange arbitrage with CKB is a relatively simple and effective strategy. By effectively utilizing price differences between different exchanges, stable profits can be obtained. Of course, caution should be exercised when selecting exchanges, reasonably controlling risks, staying calm, and continuously learning during the arbitrage process. I hope this sharing can help those who want to try arbitrage trading.
