Arbitrage of correlated assets

Taking advantage of a correlated asset de-peg.

When one of the correlated assets de-pegs and you believe the peg will be restored, you can take a leveraged position and arbitrage the difference in price between those assets. Let's imagine DAI > USDC.

DAI: $1.05 USDC: $1.00

  1. Go to the Credit Accounts app page.

  2. Open a DAI-denominated Credit Account. For example, 100.000 x 9 leverage = 900K DAI.

  3. Swap all the DAI from your Credit Account to USDC.

  4. Wait until the price of DAI returns to peg of 1:1.

  5. Close your Credit Account and fix profits.

Not taking slippage and interest rate into account, 900K DAI swapped to USDC at the price of $1.05 would be 945K USDC and when closing the account - essentially 50K profits in arbitrage.

Same strategy works for the case DAI < USDC. The only difference is that you should open a Credit Account denominated in USDC. Such strategy also can apply to WBTC, or other pegged assets.

Open Credit Account and try it.

pageOpening a Credit Account

Keep in mind that sometimes de-peg can continue for very long or never restore. You as a trader-farmer take all the risks involved. Learn more about the disclosure on risks.

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