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  1. Home
  2. /Glossary
  3. /Carry Trade
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trading

Carry Trade

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.

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Related Terms

Leverage

Borrowing funds to increase your trading position beyond what your capital alone would allow.

Yield Farming

Strategically moving capital between DeFi protocols to maximize returns.

Interest Rates

The cost of borrowing money, set by central banks and market forces.

Accumulation Phase

A period when smart money quietly buys up an asset before a major price move.

Annualized Return

The average yearly return on an investment, calculated to account for compounding.

Arbitrage

Profiting from price differences of the same asset across different markets.

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DeFi Guide/learn/defiStaking Guide/learn/stakingYield Farming Guide/learn/yield-farmingTrading Guide/learn/trading

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