🧐 Boros Arbitrage Three Axes | While some lose money shorting, others can earn a fixed 10% return

@boros_fi has recently made three updates that are worth paying attention to—

🔹 Launched the BTC/ETH Binance contract expiring on December 26

🔹 Increased OI and vault limits, which were quickly filled

🔹 Maximum leverage gradually opened up to 3x

Don’t be fooled by the surface-level parameter adjustments; this actually means that Boros's gameplay is no longer just about short-term rate speculation, but has started to incorporate interest rate curves, allowing for long-term arbitrage.

For retail investors, this opens up many arbitrage ideas.

Recently, many friends have discussed Boros with me, and a frequently asked question is—

Boros often shows negative funding rates; how is this calculated? I don’t understand, am I making money or losing money?

A couple of days ago, I saw the official Twitter mentioning this, so let me help clarify!

1⃣ The calculation of returns on Boros is actually not that complicated—

On Boros, you often see numbers like -3% or -7%. Many people instinctively think that a negative interest rate means they are on the wrong side, completely confused about whether they are making money or losing money, looking utterly bewildered!

In fact, the core of funding rate trading is very simple: don’t get hung up on positive or negative, just look at the interest rate differential.

Let’s illustrate with two examples:

① You opened a Long position at 8%, and when settling, the funding rate dropped to -3%, resulting in a difference of -11%.

Since your Long is betting on rising rates, and the actual rate has fallen, you will lose money.

② You opened a Short position at -3%, and when settling, the funding rate dropped to -7%, resulting in a difference of +4%.

Since your Short is betting on falling rates, and the rate indeed fell further, you will make money.

Got it? The positive and negative signs are just symbols; the final result entirely depends on 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 simply the difference between these two. There’s no need for excessive calculations and conversions.

Implied APR = Market Quote (the contract rate locked in when you opened the position)

Underlying APR = Actual funding rate from external exchanges (annualized)

Fixed APR = Your actual opening cost (Implied + Fees)

Settlement Logic:

Long YU: Earn (Underlying – Fixed)

Short YU: Earn (Fixed – Underlying)

Understanding this allows you to quickly escape the confusion brought by negative rates, making things much clearer, right?

2⃣ Three updated arbitrage strategies—

After this update, Boros's gameplay space has clearly expanded:

Previously, everyone’s strategy was limited to betting on the direction of short-term funding rates; now, you can combine funding rates from different maturities and markets to create strategies closer to traditional interest rate markets.

1) Cross-Maturity Arbitrage

Short-term funding rates usually follow market sentiment and can fluctuate wildly in a short time;

Long-term funding rates are more like the market's overall expectations for the coming months.

The newly added December contracts give traders a comparable interest rate curve.

If long-term contracts are overpriced while short-term rates remain low, you can consider shorting long YU while going long on short-term YU, profiting from the convergence of the two.

This logic is standard government bond curve arbitrage in traditional financial markets.

2) Cross-Market Arbitrage

With the increase in OI and vault limits, Boros can accommodate larger positions, allowing for larger-scale cross-market hedging.

The differences in funding rates between different exchanges create arbitrage opportunities; for example, the funding rate for Binance perpetuals might be 0.05%, while Hyperliquid only has 0.02%.

You can open a position on Binance, take a reverse position on Hyperliquid, and then use Boros to lock in floating risks, ultimately capturing the difference between the two markets.

3) Upgraded Cash & Carry Strategy

The classic cash & carry strategy is = buy spot + short perp, profiting from the funding rate.

However, the problem is that the funding rate itself is floating and entirely depends on market conditions. In a bull market, it can be positive and profitable; in a bear market, it can be negative, leading to losses.

The emergence of Boros allows this strategy to be upgraded; for example, institutions might prefer this strategy—

Spot ETH staking + shorting ETH perpetuals on Binance + shorting YU-ETH on Boros = price neutral + staking interest + fixed coupon.

Ultimately, you will receive three sources of income:

ETH staking yield: around 4% (floating but relatively stable).

Funding rate lock: Fixed APR from Boros Short YU (e.g., 8%, depending on the market).

Arbitrage neutrality: Since shorting perp and Short YU hedge against funding fluctuations, regardless of how the market funding rate changes next, you can lock in this 8% fixed coupon yield.

If YU is priced reasonably, this structure can easily achieve double-digit annualized returns with very low volatility.

The only thing to note is that Binance's funding is denominated in USDT, while Boros uses ETH as collateral.

There may be slight discrepancies in between, and extreme market conditions could lead to collateral fluctuations due to ETH price volatility, requiring manual adjustments.

3⃣ From Understanding to Practice: Entry Point for Retail Investors

So, as long as you understand that “interest rate differential” is the core, Boros will become very intuitive.

Next, what’s truly worth paying attention to is how it evolves into a complete interest rate exchange with product updates.

For retail investors, this represents more arbitrage opportunities—

Short-term vs. long-term differentials → maturity arbitrage;

Switching between floating and fixed → stabilizing returns;

Differences between different markets → arbitrage.

These have long been privileges of institutions in traditional finance, but now, retail investors can also use them as arbitrage tools.

If you’re interested but unsure where to start, I still have the same suggestion—start with around 100 USDT for shadow hedging, running a logic:

🔹 Open a very small perp long position on Binance, like 0.001 BTC;

🔹 Open a 1:1 Long YU-BTC position on Boros;

🔹 Observe the capital flow on both sides after 8 hours and compare the results.

This step is crucial; it’s more intuitive than just reading documents and can quickly help you understand Boros's sources of income and settlement methods.

Many people remain confused at the theoretical level because they haven’t personally run through the capital flow. Once you start, you’ll realize how attractive Boros's interest rate trading is!

Or join the newly opened Boros discussion channel by @pendlefi, where many experts share arbitrage strategies; follow along to learn! https://t.me/PendleFinanceCN

👇 This image from @0xanonnnn can help with understanding!

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