> For the complete documentation index, see [llms.txt](https://docs.atoma.fi/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.atoma.fi/strategy/funding-arbitrage.md).

# Funding Arbitrage

Funding Arbitrage is a supporting strategy. It earns an additional return on the same hedged positions that Statistical Arbitrage opens.

![Funding Arbitrage](https://1248180640-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2Fbixb58v1nJ6JAZwGeVWQ%2Fuploads%2Fgit-blob-8c8908d1c3fb065082e63197dbca07ace446efc2%2F01_funding.png?alt=media)

Perpetual futures pay funding between longs and shorts to keep their price close to the underlying asset. Each venue calculates funding independently, so the same underlying often carries a different funding rate on different venues. Atoma holds the asset long where funding is lower and short where it is higher, at equal size, and collects the difference for as long as the position is open.

## Example

* Long an S\&P 500 perpetual on venue A, where funding is 5% a year: the position pays 5%.
* Short an S\&P 500 perpetual on venue B, where funding is 15% a year: the position receives 15%.
* Net price exposure is zero, and net funding is 10% a year on the position size, before trading costs.

## Funding is not the price difference

Funding is a periodic payment between longs and shorts. The price difference is the gap between the prices of the two contracts. A position can earn funding while its price difference moves against it, and the other way round.

## What can go wrong

* The funding rate difference narrows or reverses, so the position pays funding instead of earning it.
* The two contracts diverge in price while funding is being collected.
* Fees and slippage exceed the funding received.

See [Risks](/security/risks.md).