Earn money with Cryptocurrency Arbitrage at DEFI (2024)

In this article we are going to show how you can take your arbitrations to the next level. Generally, cryptocurrency arbitration is carried out centrally on CEFI platforms, which consists of, for example, buying a cryptocurrency on Binance and selling it on Kucoin, but now we are going to also see How to use everything that is the Defi world, by definition CEFI is centralized finance and DEFI is finance decentralized when you operate with CEFI you use, as we previously mentioned, platforms such as Kucoin, Gate.io, Binance, Coinbase etc...well all of those are exchanges that are centralized, now we are going to see how to use decentralized exchanges to, for example, do different types of arbitrations as you can. be buying on Binance and selling on Uniswap Or buy on Pancakeswap and sell on Kucoin

We are going to use strategies to use everything that is Defi and everything that is Cefi, combining the two to be able to make Arbitrations This type of arbitration has a lot of potential since not only do we have some exchanges like in the Cefi world or not only do we have some exchanges like in the Defi world but by combining the two we are going to have a range of platforms a lot of exchanges where we will be able to buy and sell and we will have more quotes. So this opens up a very wide spectrum of possibilities, the first tip to carry out this type of operations is to look for a page called DefiLlama.com, this page shows us everything related to the Defi world . On this page we can Search Forks, we can Search Dex, in short we can Search different things, they will show us opportunities to for example stake cryptocurrencies in Defi, for example we can Search a Dex which is a decentralized exchange in which we will be able buy and sell cryptocurrencies and that generally operates on a specific network, for example, Pancakeswap runs on the Binance smart chain network, other Dex work on other blockchains such as Ethereum, etc. The main advantage of this type of arbitration is that you can operate without touching banks, neither Fiat currencies nor P2P arbitration, which can lead to a series of inconveniences such as blocking bank accounts, problems with the tax office of your country and being exposed to being involved. in scams like in the P2P market

DeFi Arbitrage Summary

Strategy Definition

Triangular Arbitrage Exploits price differences among three assets within a single platform.

Cross-Exchange Arbitrage Capitalizes on price discrepancies for identical assets across different platforms.

Yield Arbitrage Benefits from interest rate disparities between platforms.

Market Making Provides liquidity to earn yields from trades, with potential risks like impermanent loss.

Trade Batching and Flash Loans Arbitrage Combines multiple trades in one transaction, utilizing flash loans for executing strategies without initial capital.

DeFi Arbitrage Risks

Some risks of DeFi arbitrage to be aware of include:

Smart contract errors

Gas rates

Asset price fluctuations

Vanguard attacks

Impermanent loss

DeFi arbitrage is a profitable but complicated way to generate passive income in the DeFi space. It involves exploiting price or interest rate gaps in different exchanges and different markets using various strategies and tools. But DeFi arbitrage also requires technical skills, market knowledge, and risk management. DeFi arbitrage opportunities are always changing and evolving as new platforms and protocols emerge. Therefore, DeFi arbitrageurs must stay up-to-date and adapt to the dynamic DeFi landscape.