dydx Token

Exploiting Price Gaps on DYDX and FTX – a Simple Thought

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The price different between DYDX and FTX exchanges seems to be around 0.01% consistently. Is it worth arbitraging between these two exchanges for the same asset? In this video, we explore this with Bitcoin. At first glance, this idea feels to be a money printer. However, when getting more into the details, we see that this can be far from the case.

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Arbitrage carries risk. In this example, the risk is all in execution (which is typical for arbitrage).

website: https://cryptowizards.net

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5 Comments

  1. Love your videos as always. I would suggest the following:

    1.) Get a much larger data sample (at least a few weeks worth), and if you can try to include several centralized and decentralized exchanges. Would be good to see defi vs cefi, order book vs AAM, etc and get a sense of the exchange ecosystem.

    2.) Try and play around with models of the spread. When do spreads spike? Is there a statistical model one could build?

    3.) Look into more complicated spreads. Can I profit from converting BTC into ETH on one exchange then selling ETH to USDC on another? The round trip costs will be higher but there are exponentially more combinations of opportunities.

  2. Insightful video as always. I was wondering if it would be possible to pay for membership in crypto any time soon? It's not an option for me to pay via paypal/card at the moment. Thanks in advance)

  3. You need a larger spread because the fees will kill all your profitability. Fees will add up with leverage, so what you may then end up doing to reduce the fees is to use limit orders. The limit orders will introduce new factors of risk (partial fills or having only 1 position per exchange instead of 2 filled). In order to be competitive, you'll need to get below 100 ms speed and that will require servers nearby the exchange… this is what market makers are doing.

    I mapped a lot of the spreads at 50ms, there are a lot of opportunities with limit orders if you can get 0 fees.

    BTC is highly competitive but you may have an edge with smaller-cap because of the fewer competitors.

  4. Whenever you use leverage, the fees also goes up. For example if you trade with 1k, fee is 0.05% (1lev) you pay a fee of 50 dollars. When you use 10lev you would pay 500 dollars of fees. You just multiply your trade amount by 10 and than the fee gets calculated on the leveraged amount (1k * 10 * 0.0005).

  5. Hey, this seems like a good idea. But, i try arbitrage FTX and SERUM, because they have one connector – Solana blockchain and this is unreal arbitrage. Because i don't have so many speed for this "window" to arbitrage… i lost 0.09ms every arbitrage.

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