What is Triangle Arbitrage (How to Profit from Triangle Arbitrage)
What is Triangle Arbitrage? What is Triangle Arbitrage?Why do we need to do Tria
What is Triangle Arbitrage? What is Triangle Arbitrage?
Why do we need to do Triangle Arbitrage? This article will briefly introduce the three basic principles of blockchain: distributed, non-fungible token (NFT), decentralized finance (DeFi), and smart contracts.
In traditional finance, we usually use a method called “bidirectional” to measure the price trend of assets and their correlation with other markets. In digital currency, this method is seen as a way for buyers and sellers, similar to stocks and other commodities, to engage in transactions between the two parties. (Note: Four factors lead to one to two results), one of which is that when the price rises, investors will increase their exposure to another value change investment.)
When the portfolio changes, the volatility is often higher than the returns. For example, when the portfolio declines and the returns decrease, the losses are also halved, which is referred to as “triangular arbitrage” (scaling).
In the blockchain world, this pattern is usually composed of two parts:
1) a decentralized market structure, which means that users can choose to obtain more profits from any platform;
2) a decentralized market structure, which makes it easier for people to participate in more projects without relying on third parties to provide liquidity and information. However, this approach can be complicated for those who are not familiar with technology.
To solve these problems, we need to implement them through two different strategies. The first is to use mathematical models to predict future price trends. The second is to establish a system based on mathematical formulas to determine whether the current market conditions are reasonable. The third is to use algorithms to calculate the results of prices. In theory, if the price is lower than a certain value, the event may occur, so assume that the price of Bitcoin doubles in one day and remains at the current price.
Since the above analysis methods have certain risks, we recommend using the “zero spread” method to set prices. However, since there is no fixed time frame, it cannot be guaranteed that this price will continue to rise or fall to zero. In traditional securities markets, we believe that the following three key conditions can affect our trading strategies: (1) the market is in a bull market cycle; (2) the market sentiment is stable, achieving a profitable state; (3) the market lacks sufficient market momentum.
How to Profit from Triangle Arbitrage
Editor’s note: This article is from ChainNews (ID: chainnewscom), authorized by Star Daily to publish.
With the popularity of DeFi, the arbitrage model has become one of the focuses of the market. However, due to the opacity of information such as arbitrage returns and the allocation of portfolios, many investors choose the “break-even” method to minimize risks and obtain maximum returns under high leverage. For those who are unfamiliar with arbitrage logic, this method becomes the best choice for trading strategies because they will find significant security risks in the trading process. So, how can we profit from arbitrage opportunities? Simply put, we can break down the three tools: spot, futures, and options, so that users can obtain the highest return on investment through simple operations:
1. Exchange Bitcoin for stablecoins, such as USDT or DAI, and then convert them into US dollars, and buy or sell stablecoins on other platforms. This way, funds can be put into the liquidity pool. If the safety of assets can be guaranteed, stablecoin interest can also be earned. 2. Use ETH to mortgage stablecoins and borrow USDC. 3. Use BNB to mortgage stablecoins and borrow BTC, such as Dai. 4. Borrow USDT with USDC, which is part of the gains generated when depositing into a stablecoin. 5. Use EOS as a bridge to purchase stablecoins, such as TRX and LTC. 6. Lock in Maker and lend out DAI stablecoins with USDC. 7. In Compound, deposit USDT in Uniswap, which currently has a value close to $200,000. 8. Deposit USDC on Compound, which has no risk but only lends USDT. 9. Users who deposit in Compound need to hold a certain amount of stablecoins to receive corresponding rewards. Therefore, the volatility of these cryptocurrencies is high, and there is a certain price difference. Therefore, the more stablecoins deposited in Compound, the greater the loss. 10. Compared with USDC deposited in Maker, to get more interest from Compound loans, it must be provided to the Maker protocol provider. In other words, even if users deposit more stablecoins, they cannot directly borrow or repay stablecoins (including Binance) and stablecoin USDC. Of course, if someone is willing, they can borrow ETH from Maker and lend out USDC. If someone wants to continue depositing, they should pledge USDT and wait for the contract to have problems before withdrawing DAI. 11. The ratio between DAI and USDT deposited in Compound is very low, possibly as high as 80%. If someone is willing, they will have to pay a fee, but if you don’t bear such a cost. 12. Deposits into AaveV2, now there are three types of assets, DAI/ETH/WBTC, each with its corresponding price (i.e. WBTC/USDT).
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