Spot Arbitrage Guide

If a token trades at 1.00 USDT on Exchange A and 1.03 USDT on Exchange B, there is a visible 3% gap. The idea is to buy on A and sell on B. The trade is only real if the gap survives all costs and settlement time.

• Buy low on one venue, sell high on another.
• The visible gap is the starting point, not the profit.
• Fees, transfer time and depth decide the real result.

In transfer-based arbitrage, the trader buys on one exchange, withdraws the asset, deposits it elsewhere, and sells. It is exposed to price change while the transfer is pending, which can be slow on congested networks.

• Price can move against you during the transfer.
• Network congestion can delay deposits for a long time.
• Withdrawals can be paused exactly when you need them.

In inventory-based arbitrage, the trader already holds balances on both exchanges and executes both sides quickly. This avoids transfer risk but ties up capital on each venue.

• Both legs execute fast because no transfer is needed.
• It requires pre-funded balances on each exchange.
• Capital is split across venues instead of concentrated.

Some spreads exist only because of a real barrier. Deposits may be paused, the token may use different contract addresses across chains, or the book may be too thin to fill your size.

• Paused deposits or withdrawals block the trade.
• Different chain or contract address means it is not the same transferable asset.
• Thin depth turns a small order into heavy slippage.