Top Delta-Neutral Arbitrage Strategies: Crypto Yield Farming

Crypto yield farming in 2025 is crazy! Each week, 10 new projects claim to have discovered risk-free yield strategies. But only a few are logical - and fewer work once built.

However, if you're looking for safe and simple strategies, it's worth learning about strategies like delta-neutral arbitrage and hedging. While no strategy is completely effective, these are low-risk strategies designed to protect your assets against unexpected market volatility. So let's dive in.

Strategies we will cover in this article:

1. Contango Arbitrage

2. Spot-Perpetual Arbitrage

3. Basis Trading

1. Contango Arbitrage

What it is: This strategy takes place in contango markets where the futures price of a crypto asset is higher than its spot price. You take advantage of the price difference between the two prices of an asset.

How it works: Buy low on the spot market and sell high on the futures market. As the futures price converges with the spot price over time, the gap becomes your profit. Learn more about Contango here.

Pros:

• Offers relatively predictable returns.

• Performs well in bull markets with strong futures premiums.

Cons:

• Requires both spot and futures access.

• Profits depend on futures premiums staying high.

2. Spot-Perpetual Arbitrage

What it is: This strategy aims to profit from the funding rate generated by holding positions in perpetual futures while maintaining neutral positions in the spot market.

How it works: When the funding rate is positive, you can short the perpetual contract while hedging in spot market. When the funding rate is negative, it is vice versa. Learn more about Spot-Perpetual Arbitrage here.

Pros:

• Generates yield from funding rate payments.

• Works on many major exchanges and assets.

Cons:

• Funding rates can flip negative.

• Requires constant monitoring.

3. Basis Trading

What it is: A more flexible version of contango arbitrage. It focuses on capturing the price gap (basis) between spot and futures contracts across different timeframes.

How it works: Go long in spot and short in futures. Exit both positions when the spread narrows and lock in the difference as yield.

Pros:

• Flexible across market trends.

• Can be fine-tuned to different risk levels.

Cons:

• Requires accurate timing.

• Profit depends on basis convergence.

Conclusion

Each delta-neutral strategy has its strengths and limitations. But when done right, they’re powerful tools to generate yield without taking on market risk.

Moreover, using stablecoins to execute Delta-Neutral strategies is considered safe and secure by many users. The nature of neutral strategies and the stability of stablecoins offer excellent protection against market volatility - and Multipli does exactly that! Multipli uses Contango and Spot-Perpetual Arbitrage (through stablecoins) to generate yield for its users; it currently generates one of the highest yields in the DeFi crypto space. If this interests you, try Multipli now.