Intro to Crypto Arbitrage

🌐 한국어

Crypto arbitrage is theoretically simple: buy cheap, sell expensive. In practice, it's a cost war.

The Basics

Exchange A quotes BTC at 100,000,000 KRW. Exchange B quotes 100,300,000 KRW. That's a 300,000 KRW spread.

def spread_ratio(price_a: float, price_b: float) -> float:

    """Spread as a percentage of lower price"""

    return (price_b - price_a) / price_a * 100

print(spread_ratio(100_000_000, 100_300_000))  # 0.3%

What Eats Your Profit

A 0.3% gross spread leaves almost nothing.

• Trading fees — both buy and sell sides (usually 0.05–0.1% each)
• Withdrawal fee — network cost to move coin
• Slippage — if order book is thin, execution prices drift
• Transfer delay — price moves while coin is in transit (the scariest risk)

Net Profit Estimate

def net_profit(gross_pct: float, fee_pct: float, slippage_pct: float) -> float:

    return gross_pct - (fee_pct * 2) - slippage_pct

# 0.3% spread, 0.2% round-trip fees, 0.05% slippage

print(net_profit(0.3, 0.1, 0.05))  # 0.05% — barely anything

Seeing a spread and making a profit are utterly different. Calculate costs first.

Next article: triangular arbitrage (three-way swaps across coins).

This is educational material, not investment advice. Crypto trading carries risk of total loss. You alone are responsible for outcomes.