Is cryptocurrency arbitrage profitable? Superstate launches tokenized crypto arbitrage fund USCC

An asset management company focusing on blockchain, Superstate, has launched a cryptocurrency arbitrage fund called Superstate Crypto Carry Fund with the code: USCC. This is a tokenized fund that engages in "carry trade arbitrage" by exploiting price differences between the Bitcoin and Ethereum spot and futures markets.

Trading Strategy of USCC

The main trading strategy of USCC is to utilize the price differences between the spot and futures markets of Bitcoin and Ethereum to conduct "basis arbitrage trading," while also incorporating

• Ethereum staking rewards
• Yield from cash invested in U.S. Treasuries

to increase the fund's returns. Additionally, by offering the option to issue USCC as an ERC-20 token on the Ethereum blockchain, eligible investors will also be able to use it for collateral or settlements in the future, enhancing its utility.

What is Arbitrage Trading?

Previously reported reasons for the continuous inflow of Bitcoin ETFs without an increase in price were due to many hedge funds utilizing basis arbitrage strategies such as the cash-and-carry strategy or basis trading, buying Bitcoin ETFs and selling Bitcoin futures contracts for arbitrage trading.

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Arbitrage trading is a common trading method used by hedge funds and institutional traders, where they capitalize on pricing differences between assets and their corresponding derivative products to profit from the spread. This strategy carries minimal risk, and with large positions, significant profits can be made, especially in financial products that are less mature or have fewer competitors.

Implementing this strategy can be challenging for the average investor, involving the need to establish connections with multiple counterparties and exchanges, meet margin requirements, and maintain consistent position monitoring to manage volatility. Due to these difficulties, the strategy is lucrative in the crypto market, which is why Superstate has launched this fund in response to the demand.

Superstate Actively Introduces Tokenized Commodities

Superstate emphasizes that USCC is a strictly regulated product compliant with U.S. securities laws, with custody of spot assets held by custodial partner Anchorage Digital, ensuring bankruptcy isolation. Unlike traditional hedge funds that charge high management and performance fees, USCC only charges a fixed management fee of 0.75% and provides daily liquidity, unlike hedge funds that typically offer 30-day or quarterly redemptions.

Robert Leshner, founder of Superstate, is also the co-founder of the longstanding lending protocol Compound. The previously launched Superstate Short-Term U.S. Treasury Bond Fund (USTB) currently has assets under management of $94.13 million, offering a tokenized fund for eligible buyers to invest in short-term treasury bonds, and is currently seeking to become a partner of MakerDAO.

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