How the calculation works
One full cycle opens two equal-size perpetual legs — long on one exchange, short on another — holds through funding, then closes both with market orders. Net profit is the captured spread plus net funding, minus the four taker fills:
Funding events are counted per leg as floor(holding ÷ interval) — funding settles at the end of each interval, so a partial interval pays nothing. Annualized APR scales this cycle's ROI over a full year (8,760 hours): a tight, fast-converging spread can show a large APR, but spreads rarely persist, so treat it as an upper bound.
Key concepts
Captured spread vs quoted spread
The quoted spread is what a scanner advertises; the captured spread is what you actually keep after both legs fill. Order size walks the book and liquidity moves, so the realized number is usually smaller. Enter the spread you expect to capture on entry and give back on exit — not the headline gap.
Funding paid and received
On a perpetual, a positive funding rate means longs pay shorts. A delta-neutral pair profits when the short leg collects more funding than the long leg pays. Intervals differ by exchange and symbol — 1h, 2h, 4h or 8h — so the calculator counts each leg's payments separately instead of assuming a flat 8-hour cadence.
Why a cycle is four fills
Every cycle is four market orders: open long, open short, close long, close short. With market orders you pay the taker fee on all four. At 0.05% per side a round-trip costs about 0.20% of notional, so the spread plus net funding must clear that before you profit. See the Exchange fees reference for per-exchange rates.
What counts as a good edge
As a rule of thumb, a net annualized return above roughly 10% is meaningful and above 20–30% is excellent — but only after fees, and the bigger the edge the less likely it persists. Always compare the live opportunity against the break-even spread this calculator reports for your fee tier.
This is an estimate, not a guarantee
Funding arbitrage is market-neutral, not risk-free. Each leg is fully exposed on its own exchange, so a sharp move can liquidate the short before the long offsets it. Funding can flip against you, the spread can diverge before it converges, one leg can fill while the other slips, and exchange risk remains. Use conservative leverage and keep an ample margin buffer.
Frequently asked questions
How do you calculate profit from crypto arbitrage?
Net profit for one full cycle is the captured spread (entry spread minus exit spread, on your position size) plus net funding earned over the holding period, minus the round-trip taker fees on both legs. The calculator combines all three and expresses the result as net profit, ROI and annualized APR. Always subtract all four fills of fees before judging a trade viable.
What is funding rate arbitrage and how is it calculated?
Funding rate arbitrage is a delta-neutral strategy: hold a long perpetual on one venue and an equal short on another, profiting from the difference in funding while staying market-neutral. Per-interval profit is the net funding rate (short minus long) times your notional; annualize by multiplying by the intervals per year — 1,095 for 8-hour funding, 2,190 for 4-hour, 8,760 for 1-hour — then subtract fees.
How do I annualize a funding rate into APR?
Multiply the per-interval rate by the number of intervals in a year. For 8-hour funding, APR = rate × 3 × 365 = rate × 1,095. Use 2,190 for 4-hour, 4,380 for 2-hour and 8,760 for 1-hour. For example, a 0.01% rate every 8 hours annualizes to about 10.95% before fees.
What spread do I need to break even on an arbitrage trade?
Break-even is roughly twice the sum of both legs' taker fees, because a cycle is four fills. At 0.05% per side a round-trip costs about 0.20%, so you need the spread plus net funding to clear about 20 bps. The calculator reports the exact break-even spread for your inputs, so a tempting raw gap can still lose money once both legs are paid.
What is the difference between perp-to-perp and spot-perp (cash-and-carry) arbitrage?
Cash-and-carry buys the asset on spot and shorts a perpetual to capture funding plus basis. Perp-to-perp runs two perpetual legs — long on the cheaper venue, short on the richer one — to capture the cross-exchange spread plus the funding differential, with no spot inventory. Arbitron supports both a two-leg cross-exchange model and a one-leg directional mode.
Which fees should I include?
Include the taker fee on all four fills — open long, open short, close long, close short — since the trade worker uses market orders. Funding is a cost or a credit depending on your side. For perp-to-perp there are no withdrawal or network fees because you never move coins between exchanges, so trading fees and slippage dominate.
Is funding rate arbitrage risk-free?
No — it is market-neutral, not risk-free. Each leg is fully exposed on its own exchange, so a spike can liquidate the short before the long offsets it. Funding can flip, spreads can diverge, one leg can fill while the other slips, and exchange risk remains. Treat the output as an ideal estimate and keep conservative leverage with a margin buffer.
Do I need the same capital on both exchanges?
Yes — a two-leg trade needs margin posted on both venues at once. At 5× leverage a $50,000 total notional needs roughly $10,000 of margin split across the two exchanges, plus a buffer so neither leg nears liquidation. The calculator works in notional per leg, so size inputs to the capital you can deploy on each side.