What is Spot-Futures Arbitrage?

Spot-futures arbitrage is the strategy Ionide runs on your account, and it's a lot less exotic than it sounds. Once you understand the funding fee, the rest follows naturally.

The core idea

Perpetual futures contracts don't expire, so exchanges need a mechanism to keep their price anchored to the spot market. That mechanism is the funding fee — a periodic payment exchanged directly between traders holding long and short positions. When more traders are long than short, longs pay shorts, and vice versa.

Spot-futures arbitrage takes advantage of this by holding two offsetting positions at once:

• 50% of the position in spot — simply owning the asset.
• 50% in a short futures contract of the same size.

Because the futures leg is short exactly what the spot leg is long, price movement in the underlying asset cancels out. You're not betting on the coin going up or down. What's left is the funding payment itself, collected every few hours for as long as the position stays open.

Why the risk profile is different

Directional trading strategies live or die on being right about price. Spot-futures arbitrage doesn't need a view on price at all — the two legs hedge each other. The real risks are narrower and more mechanical:

• Funding rate flips — if the funding rate reverses, the position can start paying instead of earning. Ionide monitors this continuously and can exit or resize a position in response.
• Execution risk — the two legs need to open and close close together in time. This is exactly the kind of 24/7 monitoring a human can't reasonably do, and where automation earns its keep.
• Exchange risk — your funds sit on the exchange you connect, not with Ionide. See Setting Up API Keys Safely for how we scope permissions to limit exposure.

Where Ionide fits in

Ionide connects to your exchange with trading-only API keys, watches funding rates across supported markets around the clock, and opens, sizes, and closes these paired positions automatically. You choose the exchange, leverage, and risk pool; the engine handles execution.

If you want the walkthrough for setting this up on your own account, start with Getting Started. For a closer look at how pair selection and position sizing actually work day to day, see How Ionide's Arbitrage Engine Actually Works.