What is Luna Arbitrage?
Luna Arbitrage is a risk-free process that allows you to 4x your Luna Staking Return, in this article we cover every step along the way plus also provide a way to auto-search the market for these opportunities to save you time.
What is Arbitrage?
Arbitrage sounds fancy but is simply profit that is risk-free due to market pricing inefficiencies. Arbitrage opportunities are rare but especially in crypto are important as they provide stabilizing forces to pegged cryptos. For example UST, the Terra Ecosystem stable coin is trading at $1.02 then arbitragers will sell UST, this pushes the price down until UST reaches $1 and equilibrium is restored.
This strategy revolves around using tokens pegged to native luna like bluna, nluna and cluna to increase your luna bag. The return comes from pricing inefficiencies between different markets which trade these pairs in a state that isn’t pegged one-to-one but can be slow burnt on their respective protocol in a 1:1 ratio. This allows you to profit from the peg difference each time this strategy is executed.
What will this guide cover?
- Where to find these arbitrage opportunities
- How to execute on them
- How to automatically search for opportunities with the click of one button
Credits to where I learned how to do this
Wealth Tip is an awesome youtube channel that goes over strategies on the Terra Ecosystem. Here is a link to his longer-form video that goes over the strategy -> How To Increase Your Luna Position | bLuna Arbitrage On Terra | Arbie Telegram Bot Tutorial. The purpose of this guide is to condense the information in that guide into 3 easy to follow steps.
What you will need to execute the Luna Arbitrage Strategy
- Some Luna in a Terra Station Wallet…Yes, that is exactly it
Step 1 – Trading your Luna for bLuna or nLuna to start the Luna Arbitrage
In my experience using Astroport has provided the best trading rates for Luna into alternative versions of Luna. In this case, we are able to swap 2 Luna for 2.048 buna.
Main Dex’s you will be using
Stick around to find out how you can automatically search all Luna Exchanges to find arbitrage opportunities in seconds
Step 2 – Slow burning your bLuna on Anchor Protocol to complete the Luna Arbitrage
In this step we are taking our bLuna over to Anchor Protocol, heading to the bAsset, and slow-burning our Luna. It’s very important to Slow Burn the Luna as this avoids the 5% liquidity fee. By Slow Burning, you are forced to wait the 21 day undelegation period but have effectively made this 2.5% in this case on you’re Luna over 21 days which is insane compared to the 9-10% you get from staking over a year. This next section will be about how to use the Arbie Telegram bot to automatically find arbitrage opportunities.
Step 3 – Using the Arbie Telegram bot to automatically find Luna Arbitrage opportunities
Combing through these arbitrage opportunities is time-consuming, especially across multiple pairs and exchanges. This is where using the Arbie Telegram bot comes in, it automatically scans these exchanges for you and finds these arbitrage opportunities. Just click here and you will go straight to the page to add it to your telegram and check out below to understand how to use it.
- The green dots are opportunites above 2% so these are the ideal pairs to trade, for example Luna to LunaX on TeraaSwap is providing a 2.8% gain opportunity. This means that for every 1 Luna you trade-in you get 1.028 LunaX which can then be slow burned into 1.028 Luna over 21 days.
- Luna X is a Stader Labs Luna Derivative so once you have your LunaX off TerraSwap you will need to head to Staderlabs and use their slow burn feature to turn your LunaX back into Luna
- If we assume a conservative 2% on each run, this adds up to a return of 41% on your Luna, a 4x on the current staking return.