This May be the Best Arbitrage Opportunity in Crypto

Coinbase offers 1.25 percent for USDC deposits, IKEA settles an invoice on Ethereum


Hello defiers! Here’s what’s going on in decentralized finance:

  • Huge arb opportunity in crypto
  • Coinbase offering USDC deposit rate
  • IKEA settles invoice on Ethereum

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This May be the Best Arbitrage Opportunity in Crypto

There’s an opportunity to borrow at 3 percent and lend at ~9 percent.

Decentralized finance is less than two years old and there’s bound to be market inefficiencies for traders to arbitrage in such young products. The most straight forward way to profit is to find platforms with cheaper borrowing rates than lending rates. It’s a way to basically get free money, as returns for lending/depositing will cover and exceed what traders are paying to borrow. This is hard to come by and the difference will usually be a couple of percentage points at most. But sometimes there are bigger opportunities.

This is the case with Trinito, a lending platform based on the Orbit blockchain, that’s offering users to borrow stablecoins including Dai and USDT at 3 percent annual interest. This is a way to bootstrap liquidity in the recently-launched platform. For reference, borrowing rates for Dai in the bigger DeFi platforms Compound Finance, dYdX, Maker are at 13, 11 and 10.5 percent, respectively.


Image source: Trinito

Once traders borrow Dai at 3 percent, they can deposit it at virtually any DeFi platform to make a profit. Celsius is offering the highest rate for lending Dai, according to LoanScan, at 9.25 percent.

Trinito supports lending and borrowing tokens on three different chains, BTC, ETH and XRP. Borrow rates for BTC, ETH, XRP are at 0.1 percent.

These platforms are extremely risky, returns aren’t guaranteed as interest rates fluctuate, smart contracts can get hacked and platforms aren’t always as decentralized as they claim to be. Trinito, which has audited its smart contracts, is built on the Divine protocol by DXM, a subsidiary of Upbit’s operator and largest shareholder Dunamu. DXM controls key parameters within protocol, including minimum borrow rates and sourcing of price oracles. It also requires KYC.

For more arbitrage opportunities, check out Binance’s latest report, which talks about trades leveraging rate differences across traditional finance, centralized cryptocurrency platforms, and decentralized finance.

Coinbase Offers 1.25% Annual Return on USDC

Coinbase, which provides the most popular U.S.based crypto wallet, is now offering 1.25 percent annual return for users holding more than $1 of USDC.

Coinbase wants to keep users from leaving its platform and give them the option to convert fiat to crypto, trade and now also save on the same place. USDC is an ERC20, Ethereum-based stablecoin, backed by U.S. dollars. Coinbase won’t be lending users’ USDC and promises the tokens will always stay in users’ accounts.

It’s a good idea and for many users it will beat having USDC parked in their digital wallets, but 1.25 percent is much lower than what DeFi offers for USDC deposits (rates range from 3 percent to as high as 9 percent), and also lower what traditional fintechs offer for USD with rates at Wealthfront, Betterment and Marcus exceeding 2 percent.

IKEA Settled an Invoice Using Ethereum

IKEA Iceland has used Ethereum technology to settle an invoice with a local retailer. Supply chain payments firm Tradeshift facilitated the transfer using an Ethereum-based version of the Icelandic króna created by ConsenSys-backed startup Monerium.

Pessimistic Take: This is a transaction between two trusted parties, why does this even need a blockchain.

Optimistic Take: This is the first step into a blockchainized world with use-cases we are just starting to imagine. One of these use cases, courtesy of Martin Koppelmann: In addition about the advantages of having the invoice tokenized as an NFT that can be used as collateral for lending. The payment can then be done to the owner of the NFT (an Ethereum address/contract) instead to a pre-specified bank account.

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