Funding rate arb.

This project implements a funding rate arbitrage strategy by shorting perpetuals on Hyperliquid and hedging via 1inch’s Limit Order Protocol. The algorithm constantly monitors funding rates, opens a short position on markets with positive funding, and buys equivalent spot exposure through 1inch.

It captures the funding yield while maintaining market-neutral exposure. A backtest demonstrates consistent profitability with low volatility. The system autonomously enters and exits positions and stores analytics in a database.

More info about funding rate arbitrage: https://x.com/defi_defiler/status/1939027122082783299

How it’s made

The core algorithm takes in three key credentials: – a private key for a Hyperliquid subaccount, – an API key for 1inch’s Limit Order Protocol, – and a private key for an Arbitrum wallet.

Using these, the bot pulls live data via API: market prices, token info, and funding rates. It then analyzes whether a profitable arbitrage opportunity exists. If so, it opens a short position on Hyperliquid and immediately hedges the spot leg via 1inch.

All executed trades are logged into a database, which enables real-time tracking and performance analytics.

The bot continuously loops: it monitors funding rate shifts and, right before the funding tick, it closes the short and sells the hedge, locking in profit.

This cycle repeats automatically, keeping the strategy running and capturing yield without manual intervention.

The entire bot is deployed on Fluence Network — a decentralized compute protocol designed for running backend services without relying on centralized servers or cloud infrastructure.