Funding Rate Arbitrage: Earn 15-40% APY with Zero Market Risk

How Funding Rates Work

Perpetual futures have no expiry date. To keep their price close to spot, exchanges use funding: when futures > spot, longs pay shorts (and vice versa). Payments happen every 8 hours.

The Strategy Step by Step

1. Find a coin with high positive funding (0.03%+ per 8h) on iSetMonitoring's Funding Rate scanner
2. Buy 1 unit on spot market (e.g., 1 ETH)
3. Open 1 unit short on perpetual futures (1x leverage, no liquidation risk)
4. Your net position is zero — price movements cancel out
5. Collect funding payments every 8 hours

Example Calculation

ETH funding rate: 0.03% per 8h (common during bull markets)

• Position: $10,000
• Per payment: $10,000 × 0.03% = $3
• Per day (3 payments): $9
• Per month: $270
• APY: ~32%

Risk Management

• Keep margin ratio above 50% on futures
• Exit if funding turns negative for 3+ consecutive payments
• Diversify across 3-5 coins
• Use iSetMonitoring alerts to track rate changes

Best Exchanges for This Strategy

Binance (lowest fees), Bybit (best UI), OKX (most pairs), Bitget (good funding rates).