4. Arbitrage and Liquidity Mining Strategies
Beyond Market Making, Hummingbot supports complex strategies such as Arbitrage and Liquidity Mining.
4.1. Understanding and Configuring the Arbitrage Strategy
Arbitrage is a strategy that seeks risk-free profit by exploiting price differences between two or more different exchanges. Select arbitrage when using the create command to set up the strategy.
# Key Arbitrage Settings
primary_exchange: binance
secondary_exchange: kucoin
min_profitability: 0.3 # Minimum profitability (%)Caution: Fees and withdrawal times between exchanges can significantly impact the profitability of arbitrage.
4.2. Liquidity Mining Strategy (External Strategy)
Liquidity Mining is a strategy where you provide liquidity for a specific trading pair to earn rewards. This strategy operates in conjunction with the Hummingbot Miner platform, separate from the Hummingbot client.
- Provide Liquidity: Place bid/ask orders on the designated exchange.
- Obtain Rewards: You receive rewards from the platform proportional to the duration for which liquidity is maintained.