Boros arbitrage three board axe 丨 also short selling, some people lose money, some can take 10% fixed income @Boros_fi has recently undergone three updates, which are worth keeping an eye on—— The BTC/ETH Binance contract, which expires on December 26th, has been launched OI and vault limit increase, vault limit quickly depleted The maximum leverage gradually opens up to 3 times Although it may seem like just a few parameter adjustments on the surface, in reality, this means that Boros' gameplay is no longer just short-term rate trading, but also has interest rate curves that allow for long-term arbitrage. For individual investors, it has opened up many arbitrage ideas. Recently, many friends have been discussing Boros with me and have been asked a lot of questions—— How is it calculated that negative rates often appear on Boros? I don't understand, did I make a profit or lose? A few days ago, I saw the official Twitter also mentioning this, let me help understand it! one ⃣ Boros' profit calculation is actually not that complicated—— On Boros, numbers like -3% and -7% often appear. Many people instinctively feel the opposite direction when they see negative interest rates, and they are completely confused whether they are making money or losing money. They look bewildered! In fact, the core of fund rate trading is very simple: don't dwell on positive and negative, just look at the interest rate spread. Here are two simple examples: ① You opened a Long position at 8%, but the fund rate dropped to -3% during settlement, resulting in a difference of -11%. Because your Long is a long rate, you want the interest rate to increase, but in reality it has decreased, so you will lose money. ② You opened a short position at -3%, and the fund rate dropped to -7% during settlement, with a difference of+4%. Because your short is a short rate, you want the interest rate to decrease, and the interest rate has indeed further decreased, so you will make money. Understood? The sign is just a symbol, and the final result depends entirely on the difference between the interest rate at the time of opening the position and the interest rate at the time of settlement. The essence of profit and loss is the difference between these two. No need for additional calculations and conversions. Implied APR=Market quote (the contract interest rate locked in when you opened the warehouse) Underlying APR=Actual funding rate of external exchange (converted to annualized) Fixed APR=Your actual warehousing cost (Implied+handling fee) Settlement logic: Long YU: Underlying – Fixed Short YU: Fixed Underlying Once you understand this, you can quickly get rid of the confusion caused by negative interest rates, isn't it much clearer? two ⃣ Three updated arbitrage strategies—— After this update, Boros' gameplay space has clearly opened up: Previously, everyone's gameplay was limited to betting on short-term capital rates. Now, they can combine capital rates from different maturities and markets to play strategies that are closer to traditional interest rate markets. 1) Cross term arbitrage Short term funding rates usually follow market sentiment and are prone to drastic fluctuations in a short period of time; The long-term funding rate is more like the overall market expectation for the next few months. The newly added December contract, Boros, provides traders with a comparable interest rate curve. If there is a situation where long-term contracts are priced too high while short-term interest rates are still low, one can consider shorting long-term YU while going long short-term YU, and earn a spread when the two converge. This logic is the standard treasury bond curve arbitrage in the traditional financial market. 2) Cross market arbitrage This time, the OI and Vault limits have been raised, allowing Boros to hold larger positions and engage in larger scale cross market hedging. The difference in funding rates between different exchanges is itself an arbitrage space, for example, Binance Peru's funding rate may be 0.05%, while Hyperliquid's is only 0.02%. You can establish a position on Binance, open a reverse position on Hyperliquid, lock in floating risk with Boros, and ultimately take the difference between the two markets. 3) Upgraded Cash&Carry Strategy The most classic traditional cash&carry strategy is to buy spot and short the PERP, taking the capital rate. But the problem is that the funding rate itself is floating and completely dependent on the market environment. In a bull market, being positive can lead to a steady profit; If a bear market is negative, you have to go backwards. The emergence of Boros allows this strategy to be upgraded, for example, institutions may prefer this strategy—— Spot ETH staking+Binance short selling ETH perpetual+Boros short selling YU-ETH=price neutral+staking interest+fixed coupon interest. In the end, you will receive three pieces of income: ETH staking yield: around 4% (fluctuating but relatively stable). Capital rate lock: Boros Short YU has a fixed APR (e.g. 8%, depending on the market). Arbitrage Neutralization: Because short positions such as PERP and Short YU hedge against funding volatility, you can lock in this 8% fixed coupon yield regardless of any future changes in market funding rates. If YU pricing is reasonable, this structure can easily reach double-digit annualization with low volatility. The only thing to note is that Binance's funding is denominated in USDT, while Boros is based on ETH margin. There may be slight deviations in the middle, and extreme market fluctuations in ETH prices may cause margin fluctuations, requiring manual adjustment of positions. three ⃣ From Understanding to Practice: The Entry Point for Retail Investors So, in fact, as long as we understand that "interest rate spread" is the core, Boros will become very intuitive. Next, what is truly worth paying attention to is how it gradually evolves into a complete interest rate exchange with product updates. For individual investors, this represents more arbitrage opportunities—— Short term and long-term differences → term arbitrage; Switching between floating and fixed → stabilizing returns; Differences in different markets → arbitrage. These have long been institutional privileges in traditional finance, but now retail investors can also use them as arbitrage tools. If you are interested but a bit at a loss, my suggestion is still to use around 100u for shadow hedging and run a logic: Open a very small PERP multiple order on Binance, such as 0.001 BTC; Open a Long YU-BTC 1:1 on Boros; Observe the flow of funds on both sides every 8 hours and compare the results. This step is crucial, as it is more intuitive than grinding through documents and allows for a quick understanding of Boros' revenue sources and settlement methods. Many people remain confused at the theoretical level simply because they have not personally experienced the flow of funds. Get moving first, and you'll know how great Boros' interest rate trading is! Or join @ pendle_fi's newly opened Boros communication channel, where many experts share arbitrage strategies. Follow and learn! https://t.me/PendleFinance_CN @ The image 0xanonnnn can help better understand!