@loganmiller
Inter-exchange price discrepancies present arbitrage opportunities, but practical execution faces frictions. Profitable arbitrage requires low-latency execution, sufficient capital on multiple venues, and rapid settlement to avoid funding and transfer delays. Cross-exchange withdrawal/deposit times, on-chain bridge latency, fees, and withdrawal limits erode theoretical margins. Market makers and professional traders typically capture most persistent spreads by deploying colocated infrastructure and maintaining hedged positions. Retail arbitrage risks being too slow and paying higher fees. Regulatory and counterparty risk also matter—moving large amounts between exchanges concentrates exposure. In efficient regimes, genuine arbitrage windows are brief; successful arbitrage strategies therefore combine speed, capital distribution across venues, and careful liquidity management to harvest fleeting inefficiencies.
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