💵What Currency To Choose

Arbitrage Opportunities and APY Performance Across Different Currencies

In the dynamic landscape of DeFi arbitrage, the performance of our trading strategies—and by extension, the annual percentage yield (APY) of our funds—is significantly influenced by the choice of asset denomination. A key factor underpinning this reality is the prevalence of USD/X trading pairs across the DeFi ecosystem. The majority of trading pairs are denominated in USD or its stablecoin equivalents, which naturally creates a larger playground for arbitrage opportunities. This abundance of USD-based trading pairs allows our strategies to identify and exploit price discrepancies more frequently, enhancing the potential for profit.

ETH comes in as the second most prevalent base currency in terms of trading volume and available pairs. While ETH also offers a considerable array of arbitrage opportunities, the sheer volume and variety of USD/X pairs still give USD-denominated funds an edge in terms of accessibility and opportunity frequency.

BTC, despite its prominence as a leading cryptocurrency, finds itself in a different position when it comes to DeFi arbitrage. The number of BTC/X trading pairs is relatively limited within the DeFi space, which directly impacts the scope for arbitrage. This limitation in trading pair variety restricts the frequency and scale of arbitrage opportunities available for BTC-denominated funds, leading to comparatively lower APY performance.

Therefore, the dominance of USD in trading pairs directly correlates with a higher frequency of arbitrage opportunities. This hierarchy of arbitrage potential—USD leading, followed by ETH, and BTC with the least—naturally translates into the observed differences in APY performance among our funds. USD-denominated funds, benefiting from the most extensive set of arbitrage opportunities, tend to show slightly better performance, with ETH funds in the middle and BTC funds trailing due to their more constrained arbitrage landscape.