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Borrowing in a low-interest-rate asset to invest in a higher-yielding one, profiting from the difference.
Definition
Borrowing in a low-interest-rate asset to invest in a higher-yielding one, profiting from the difference. In crypto, this might mean borrowing stablecoins at 5% to deposit in a protocol offering 15%. The risk is that yields change or positions get liquidated before the carry pays off.
Related Terms
Borrowing funds to increase your trading position beyond what your capital alone would allow.
Strategically moving capital between DeFi protocols to maximize returns.
The cost of borrowing money, set by central banks and market forces.
A period when smart money quietly buys up an asset before a major price move.
The average yearly return on an investment, calculated to account for compounding.
Profiting from price differences of the same asset across different markets.
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