Arbitrage in STEEM/SBD
Index - https://steemit.com/tax/@alhofmeister/4rnkcy-tax-blog-index
Introduction
I was thinking about the difference in the STEEM/SBD spread comparing Poloniex, and I thought it might be fun to write an article examining arbitrage in the market between the two similar cryptocurrencies.
Fact Pattern
Joe Steemer has 100 SBD on the Steemit website and notices that there might be an opportunity to increase his wealth by transferring amounts to Poloniex and exchanging his SBD for STEEM and transferring it back. The steps that he follows are listed below.
- Transfers funds to Poloniex from the Steem website.
- Sells SBD to purchase Bitcoin (since he can't directly trade SBD for STEEM).
- Buys STEEM using the Bitcoin he purchased (subject to a spread and a 0.25% fee).
- Transfers STEEM from Poloneix to the STEEM website (subject to a 0.01 STEEM fee).
- Sells STEEM to purchase SBD (subject to a spread).
Calculations
Currency Translation
Trades
Conclusion
As shown in the calculations, the market arbitrage of $0.67 is completely negated by the fees/spread which cost Joe $9.63 for a net loss of $8.96. A profit may, however, be made if the discrepancies in the price between the markets reached a critical point.
@OriginalWorks
Thanks for the post I just was wondering today if it could be profitable as i saw the spread on the market! ;)
Yeah, it's certainly worth watching. Due to the timing associated with moving money around, it can be difficult to take advantage of arbitrage.
STEEM and SBD prices on HitBTC are also higher than the average. But unfortunately, deposits are offline most of the time.
That's true.