Spot-Derivative Arbitrage

Spot-derivative arbitrage exploits price discrepancies between the spot market and the derivative market. Traders typically buy the cheaper asset and sell the more expensive one to lock in a risk-free profit.

In crypto, this often involves buying spot tokens and selling futures or options to capture the funding rate or the basis premium. This process aligns prices across different trading venues and ensures that derivative prices reflect the true spot value.

It is a foundational activity that provides liquidity and price discovery for the entire digital asset ecosystem.