Recently, there have been quite a few cryptocurrencies in the contract market with large fluctuations in funding rates, such as FOLW, ONT, 0G, and others. Many people are taking advantage of this opportunity to earn significant profits through arbitrage. Upon closer inspection, each trade can yield between 50 to 200 USD in profit, mainly depending on your position size and the speed of closing your position. Proper position management reduces the risk of liquidation and naturally increases your earnings.

If you want to try entering the market, you need to prepare three things first: choose a leading exchange as your main platform (a stable trading environment is very important), prepare a capital of 50 to 300 USD (adjust based on different projects), and ensure a reliable internet connection. Once these conditions are met, you can start trading.

The underlying logic of this arbitrage is actually not complicated. At fixed intervals, the exchange settles the funding rate, with longs and shorts paying each other. If your earned funding income is enough to cover the opening costs, the arbitrage is profitable. Interestingly, even if extreme market volatility causes your position to be liquidated, the funding payments you received can still result in a profit.

How exactly to operate? The first step is to find assets on the exchange with a funding rate of ±1.5% or higher. Use the exchange’s built-in funding rate query tool, and sort by funding rate using the filter in the top right corner. It’s easy to find targets like FLOW this way.

The second step is to check the maximum leverage. Ideally, it should be above 75x, so even if you get liquidated, there’s still arbitrage space. If only 50x, then you rely more on your timing for closing positions to make a profit, which carries higher risk.

The third step is to configure the trading details. Transfer funds from other modules to the futures module and select 75x leverage. The position mode must be isolated margin for clearer risk management. Use limit orders, setting the price at the best bid or ask (depending on whether the funding rate is positive or negative). Set the position size to 100% or directly input the amount in USD you want to open. Then decide whether to go long or short based on the sign of the funding rate—positive rate means opening a short position, negative rate means going long.

The most critical part is to time the opening and closing of positions. Usually, open the position 1 to 2 seconds before the funding rate settlement, around X:59:59, then close immediately at X:00:00 when the funding is settled. Although this time window is short, it’s the moment you can lock in the funding income.

In simple terms, there are many arbitrage methods in Web3, and this is just one of the more stable strategies. If this approach is helpful to everyone, I will share more arbitrage techniques in the future.