CEX Arbitrage FAQ

CEX arbitrage is earning on the price difference of the same asset across centralized exchanges. The idea is to buy the asset where it is cheaper and almost simultaneously sell it where it is more expensive. Profit comes from the spread minus trading fees and transfer costs. P2P.Army tracks such differences in real time across many exchanges and pairs.

• Cross-exchange — buying an asset on one exchange and selling it on another where the price is higher.
• Triangular — a chain of three trading pairs within one exchange (e.g. USDT → BTC → ETH → USDT) that ends in a profit.
• Spot-futures (funding) — holding a spot position and an opposite futures position to collect funding.
• Stablecoin arbitrage — earning on deviations of stablecoin rates (USDT, USDC, FDUSD, DAI) from parity.

In its classic form, cross-exchange arbitrage looks like this: you buy an asset on exchange A (where it is cheaper), transfer it to exchange B (where it is more expensive) and sell. The final profit is the price difference minus trading fees and the network transfer fee.

To avoid depending on transfer time between exchanges, many traders keep a reserve of assets on both venues at once and "rebalance" periodically. This removes the risk of the price changing while the coin travels through the network.

The same asset can be moved over different networks, and the choice directly affects the fee and speed. For example, sending USDT via TRC20 is usually cheaper and faster than via ERC20. It is critical that the network is supported by both the sending and the receiving exchange: sending over an unsupported network or with a wrong memo/tag can lead to loss of funds.

Slippage is the difference between the expected price and the actual execution price of an order. If there is little liquidity in the order book, a large market order fills across several price levels and the average price ends up worse than expected. For an arbitrageur slippage is a hidden cost that can easily eat the whole spread, so you should always assess order-book depth.

Triangular arbitrage is done within a single exchange and requires no transfers between venues. You move along a chain of three trading pairs — for example USDT → BTC → BTC/ETH → ETH/USDT — and return to the starting asset. If a temporary rate mismatch makes the final amount larger than the initial one (after fees), the trade is profitable. Such opportunities are short-lived and require fast execution.

Spot is the market where you buy or sell the asset itself for immediate delivery at the current price and own the coins right away.

Futures are derivative contracts where you can use leverage and open both long and short positions. The price of perpetual futures is kept near the spot price through the funding mechanism.

The funding rate is periodic payments between holders of long and short positions on perpetual futures that keep the contract price near spot. In funding arbitrage a trader opens a market-neutral position: buys the asset on spot and simultaneously opens a short futures position of the same size. Price does not affect the result, and income comes from positive funding. P2P.Army helps you find pairs with favorable funding.

Stablecoin arbitrage relies on the fact that stablecoin rates (USDT, USDC, FDUSD, DAI) are not always exactly $1 and diverge slightly between each other and between exchanges. A trader buys a temporarily discounted stablecoin and sells it when the rate returns to parity, or uses the rate difference between pairs. The risk is lower than with volatile coins, but the spread is usually small too.

A market order executes instantly at the best available prices in the order book. It is convenient for speed, but you pay the taker fee and risk slippage.

A limit order executes only at your specified price or better. It adds liquidity to the order book, so it usually gets the lower maker fee, but it may not fill if the price does not reach your level.

In arbitrage spreads are usually small, so fees play a decisive role. Account for several types of costs at once: the maker/taker trading fee on both the buy and the sell, the network fee for transfers between exchanges, and possible slippage. Volume discounts, using an exchange token (e.g. BNB) and limit orders help reduce costs. Always calculate the net profit after all fees.

• Network and exchange delays — while a transfer travels between exchanges, a favorable spread can disappear.
• Deposit/withdrawal suspensions — an exchange may temporarily disable deposits or withdrawals of a specific coin or network.
• Slippage and low liquidity — a large order fills worse than the expected price.
• Technical and market failures — API delays, trading halts, sharp volatility.

On most major centralized exchanges identity verification (KYC) is required for full deposits/withdrawals and to lift limits. Without completed KYC account features are heavily restricted, and during compliance checks the account may be temporarily frozen. For stable arbitrage it is worth completing verification in advance on all the venues you use and keeping accounts in good standing.