What Is the Fundamental Difference between Triangular and Spatial Cryptocurrency Arbitrage?
Triangular arbitrage involves exploiting a price discrepancy among three different assets on the same exchange. The trade path is Asset A to B, B to C, and C back to A, all in one sequence.
Spatial arbitrage, conversely, involves exploiting a price difference for the same asset across two or more different exchanges. This requires moving assets between platforms, introducing withdrawal/deposit fees and transfer time risks.
Glossar
Automated Market Makers
Architecture ⎊ Automated Market Makers represent a fundamental shift in price discovery, moving away from traditional order book models towards algorithmic execution predicated on mathematical formulas.
Price Discrepancy
Arbitrage ⎊ Price discrepancy in cryptocurrency, options, and derivatives markets often manifests as temporary mispricing across exchanges or related instruments, creating arbitrage opportunities for sophisticated traders.
Triangular Arbitrage
Arbitrage ⎊ Triangular arbitrage, within the context of cryptocurrency derivatives and financial markets, exploits temporary price discrepancies across three distinct markets to generate risk-free profits.