Futures
Access hundreds of perpetual contracts
TradFi
Gold
One platform for global traditional assets
Options
Hot
Trade European-style vanilla options
Unified Account
Maximize your capital efficiency
Demo Trading
Introduction to Futures Trading
Learn the basics of futures trading
Futures Events
Join events to earn rewards
Demo Trading
Use virtual funds to practice risk-free trading
Launch
CandyDrop
Collect candies to earn airdrops
Launchpool
Quick staking, earn potential new tokens
HODLer Airdrop
Hold GT and get massive airdrops for free
Pre-IPOs
Unlock full access to global stock IPOs
Alpha Points
Trade on-chain assets and earn airdrops
Futures Points
Earn futures points and claim airdrop rewards
Promotions
AI
Gate AI
Your all-in-one conversational AI partner
Gate AI Bot
Use Gate AI directly in your social App
GateClaw
Gate Blue Lobster, ready to go
Gate for AI Agent
Gate MCP
Gate Skills Hub
10K+ Skills
From office tasks to trading, the all-in-one skill hub makes AI even more useful.
GateRouter
Smartly choose from 30+ AI models, with 0% extra fees
Thank you @Phyrex_Ni for the discussion. Here's an example of an arbitrage process:
Thank you @Phyrex_Ni for the discussion. Here’s an example of an arbitrage process:
The spot ETF IBIT suffers a fund liquidation: massive amounts of $IBIT are sold, and they are sold at a discount.
When there is a certain spread between (the $IBIT stock price) and (the BTC net asset value contained per share of $IBIT), arbitrageurs buy the discounted $IBIT and sell BTC on the BTC spot/futures market to perform the arbitrage.
Selling BTC does not require the market maker/arbitrageur to hold BTC. For example, they can borrow BTC from the spot market to sell, or short BTC using a U-margined futures contract. As long as the arbitrageur has enough USD, they can sell a sufficient amount of BTC.
This completes the transmission from $IBIT selling to BTC selling. For instance, due to a fund liquidation, a total 95% discount wipes out $IBIT equivalent to 60,000 BTC. All of it is bought by arbitrageurs, who simultaneously sell 60,000 BTC in the BTC spot/futures market.
Arbitrageurs wait for the $IBIT discount to recover, then sell $IBIT at the normal price and simultaneously close the same amount of short positions. During this process, no redemption of $IBIT into BTC occurs.
If the $IBIT discount does not recover for a long time, or if arbitrageurs take on too much $IBIT and generate risk by crowding out liquidity, then the arbitrageurs will redeem $IBIT for BTC, sell the spot BTC, and close an equivalent amount of short positions.
5 is the main trading method for arbitrageurs, and 6 is a special case. Suppose a fund liquidates BTC equivalent to 60,000 BTC. Then as much as 54,000 BTC may be hedged away, and only 6,000 BTC will go through the redemption-into-spot (redeem into spot) path.