Main Takeaways
Binance Smart Arbitrage offers users a simple, automated way to earn rewards by collecting funding fees from the futures market with minimal activity.
By hedging positions in both spot and futures markets, Smart Arbitrage helps manage exposure to price volatility while aiming for stable returns.
Smart Arbitrage provides transparency, allowing users to easily track their portfolio, funding fees, and strategy performance in real time.
This is a general announcement. Products and services referred to here may not be available in your region.
Binance Smart Arbitrage is a tool designed to help users earn rewards by utilizing a risk-balancing strategy in the futures market. It works by taking advantage of the funding rate mechanism in perpetual futures, allowing users to collect funding fees instead of relying on price movements.
By holding opposing positions in both the spot and futures markets — one long, one short — Smart Arbitrage balances potential gains and losses, focusing on collecting steady funding fees over time. With just a few clicks, users can set up their strategy and start earning without needing constant market activity.
How Do Funding Fees and Smart Arbitrage Work?
In perpetual futures markets, funding fees are periodic payments exchanged between traders holding long and short positions. These fees help align futures prices with the spot price. A positive funding rate means long positions pay fees to short positions, while a negative rate means short positions pay fees to longs.
When you subscribe to Smart Arbitrage, the strategy automatically opens a long or short position in the futures market and the opposite position in the spot market. For example, if the funding rate is positive, the strategy will take a short position in the futures market and a long position in the spot market, allowing you to collect funding fees from traders holding long positions.
The main goal of Smart Arbitrage is to collect these funding fees over time. By holding opposing positions, the strategy hedges against price fluctuations — gains in one market offset losses in the other — while focusing on earning a steady stream of funding fees.
Who Should Use Smart Arbitrage?
Smart Arbitrage is best suited for experienced users familiar with spot and futures trading who are looking to earn rewards with reduced risk. If you understand these markets and want a strategy that doesn’t require constant management, this product is designed for you.
The key benefit of Smart Arbitrage is its automation, which simplifies the process of collecting funding fees. While the purpose of the strategy is to collect these fees — generally more stable than attempting to profit from unpredictable price movements — the automation eliminates the need for manual execution of opposing positions in both spot and futures markets.
This not only helps manage exposure to large price swings, but also saves time and effort, providing a more stable earning opportunity with minimal intervention, though some risk remains.
For users seeking to earn rewards with less exposure to market volatility, Smart Arbitrage offers a balanced approach. However, it’s important to stay aware of market conditions, as changes in funding rates or extreme price swings can impact your returns.
Key Benefits of Binance Smart Arbitrage
Smart Arbitrage offers several advantages for users looking to earn rewards while managing their exposure to market volatility. Below are the key benefits:
Low-Risk Reward (Delta-Hedge): Smart Arbitrage uses a delta-hedge strategy to reduce exposure to large price movements by holding opposite positions in the spot and futures markets. This creates more stable returns by offsetting potential gains and losses.
Earn Funding Fees: Smart Arbitrage focuses on collecting funding fees — payments between futures traders that occur regularly. Your earnings depend on the size of your position and the funding rate, which fluctuates by market.
Automation: Once you subscribe, Smart Arbitrage runs automatically. Users don’t have to constantly manually execute opposing positions in both spot and futures markets, making this strategy a good option for those who want to earn rewards without active trading.
Risks of Smart Arbitrage
While Smart Arbitrage offers opportunities to earn rewards, it's important to understand the potential risks involved. Below are the key risks associated with Smart Arbitrage that you should consider before subscribing:
Funding Rate Reversal: One risk to consider is the potential change in the funding rate. If this shifts against your position — for example, from positive to negative — you may end up paying fees instead of collecting them. This reversal can reduce or even negate your returns. Setting up funding rate alerts in your Smart Arbitrage Portfolio can help you stay informed and adjust accordingly.
Spread Risks: The spread between spot and futures prices can also impact profitability. If the spread widens unexpectedly, it can reduce your returns. Monitoring this regularly is important to ensure your strategy remains profitable.
Liquidation Risks: While the strategy aims to reduce risk, there’s still a possibility of liquidation during extreme conditions. If the market experiences sharp price swings, the futures position could be liquidated, resulting in losses. Keeping a sufficient margin and staying informed about market conditions can help manage this risk.
Getting Started with Binance Smart Arbitrage: A Step-by-Step Guide
Getting started with Smart Arbitrage is easy. Simply follow these steps:
Visit Binance Earn: Navigate to the Binance Earn page and select Smart Arbitrage.
Choose Your Strategy: Decide how much to invest and select your preferred portfolio. Smart Arbitrage will automatically manage your positions.
Subscribe: Click Subscribe to begin. Confirm your investment amount to get started.
Monitor Your Portfolio: After subscribing, track your position in My Portfolio or through the Earn Wallet. You’ll be able to see position size, funding fees collected, and market value.
Redeem and Close: When you’re ready to close your strategy, visit the Earn Wallet and click Redeem to end your positions.
Start earning rewards today with Binance Smart Arbitrage and take advantage of this approach to collecting funding fees.
Final Thoughts
Binance Smart Arbitrage offers a unique opportunity for users to potentially earn rewards with a relatively low-risk strategy. By leveraging the delta-hedge approach, Smart Arbitrage reduces exposure to price volatility while collecting funding fees from futures markets. The platform also provides full transparency, allowing users to easily monitor their positions and track their earnings.
With its simple setup and automatic management, Smart Arbitrage is accessible to both experienced traders and those looking for a straightforward way to engage in arbitrage strategies. If you’re seeking a more stable earning option without the need for constant market activity, this product could be for you.
Take the next step and explore Binance Smart Arbitrage today.
Further Reading
Disclaimer: Risks of Smart Arbitrage include, without limitation, the possibility that if the direction of the funding rate reverses while employing a futures arbitrage strategy, you may end up paying instead of earning a funding fee. If the price discrepancies of the underlying assets between the Spot and Futures markets become larger, or if liquidity is insufficient on either side, there may be delays or difficulties in opening or closing positions, which can undermine the effectiveness of the intended hedging strategy. APR is an estimate of rewards you will earn in cryptocurrency over the selected timeframe and does not represent actual or predicted returns/yield in any fiat currency. APR is adjusted daily, and the estimated rewards may differ from the actual rewards generated. You are solely responsible for your investment decisions, and Binance is not liable for any losses you may incur. You should only invest in products you are familiar with and understand the risks. Carefully consider your investment experience, financial situation, investment objectives, and risk tolerance, and consult an independent financial adviser prior to making any investment. Content on our platform does not contain advice or recommendations and should not be construed as financial advice. Smart Arbitrage may not be available in your region. This content is not intended for users/countries to which restrictions apply. For more information, see our Terms of Use and Risk Warning.