Since its launch, the Spot-Futures Arbitrage bot has been welcomed by many users and helped our users make more than 1 Million of the arbitrage profit. Its risk is relatively low, but its income is relatively high, reaching an annual rate of 15%-50%. However, any trading strategy has risks, and Spot-Futures Arbitrage is no exception. When extreme market conditions occur, or when Binance's currency security contract system and spot system down, the principal of your investment may be lost. In the meantime, many users came to us and asked for increase the 50k limitation for the arbitrage bot.
The 50k USDT cap was designed to control the risks for our users and Pionex at the very beginning. In case any issue occurred, Pionex can still compensate our users if the problem is on Pionex.
During the arbitrage bot development, the Binance Broker API robustness is the most critical bottleneck for our development team. Several issues happened in the high-traffic period, resulting in the low speed of closing positions and creating positions for the arbitrage bot. Take one of the incidents as example, we need to wait for more than 1 minute for every API call.
After improving our infrastructure and including more than 117 different scenarios, here lies the "Retail" version of the spot-futures arbitrage bot.
Even we have already improved most of the cases and scenarios, we still can't prevent the black swan event happen. For example, we compensated users who suffered from the BZRX negative funding fee on 2020.12.22, which was caused by the Binance API failure.
And the above potential issues will be much severe once we increased the personal cap for every user. This is the main reason that we still limit the cap to 50k USDT right now.
To make the whole service more robust and sustainable, we have researched how other companies did. Bitfinex provided the lending feature for their users and charges 15% of the lending profit from it, and built a more robust system with the income. Crypto derivatives exchange charge liquidation fees and set up SAFU fund for their users, making them able to fight any potential systematic problem.
Therefore, we decided to charge for the spot-futures arbitrage bot and make this service more sustainable.
- Pionex charges 10% of the profit generated by the spot-futures arbitrage bot.
- The policy will be started at 16:00 UTC on March 14th. Every action that meets the below situation will be charged. (no matter what's the created time of that bot)
- When the user closes the Spot-Futures Arbitrage bot or reduces the position, the arbitrage profit plus floating profit and loss will be automatically calculated. The fee will be deducted.
- With the Arbitrage SAFU fund's launch, each account's arbitrage cap would be increased from 50,000 USDT to 100,000 USDT.
- Pionex will deposit 50% of the fee revenue from the arbitrage bot into the Arbitrage SAFU funds.
What are Pionex Arbitrage SAFU funds?
- The arbitrage SAFU funds will be used as compensation in the Black Swan incident while using Pionex spot-futures arbitrage bot.
- All coins on Pionex share a common insurance fund, with the exception of BTC and ETH, that share another insurance fund.
- Pionex will release another landing page for you to check the balance of each fund.
Users can apply for compensation when the following situations occur:
- When the spot or contract system of Binance or Huobi aggregated by Pionex fails, resulting in an inability to trade and transfer, and finally resulting in loss of the principal of the user (i.e., when the total profit is negative)
- When the spot or contract system of Binance or Huobi aggregated by Pionex fails, resulting in an inability to trade and transfer money, and finally resulting in the user being unable to shut down the Spot-Futures Arbitrage bot and generating a negative funding fee
- When the spot price rises rapidly, resulting in the liquidation of the contract position, and the spot price falls rapidly at this time, resulting in the loss of principal before the spot can be sold
- When the spot is automatically reduced due to the rapid decline of the spot price, the spot price continues to fall at this time, and the spot has not yet had time to sell, resulting in a loss of principal
- The accumulated compensation amount obtained by the user shall not exceed the fee paid by the user
- When the SAFU fund is used up and the newly added SAFU fund within 30 days after applying for compensation cannot cover the compensation amount, the user will not be able to get the full compensation
- If the user's funds cannot be withdrawn due to Binance or Huobi's reasons, this won't be covered by the Arbitrage insurance fund.
Benefits for Beginners
The first 10,000 USDT of Spot-Futures Arbitrage bot is deductible, and users can also choose to actively join the current arbitrage risk guarantee fund. This 10,000 USDT is the cumulative amount. This amount will still be accumulated if the bot is closed or the position is reduced.
Holding BUB and get discount
For part of the service fee, holding BUB will get a discount. Discount details are below:
|# of BUB||Discount of the fee|
|500 BUB||5% off|
|1,000 BUB||10% off|
|2,000 BUB||15% off|
|3,000 BUB||20% off|
|5,000 BUB||25% off|
|10,000 BUB||30% off|
|15,000 BUB||35% off|
|20,000 BUB||40% off|
|50,000 BUB||50% off|