## The Real On-Chain Arbitrage Bill

"Annualized 18%" sounds attractive, but in the on-chain world, every gas fee, transaction fee, and cross-chain cost quietly eats into your profits. Today, let's do a clear accounting to see how much protection fee you pay when using 10,000 USDT to invest in USD1 for 30 days, and how much you actually get in hand at the end.

## Complete Breakdown of Single-Transaction Costs

Let's start from the most realistic point—every step costs money.

**Step 1: Initial Collateral (Deposit ETH)** — $5-15
Mainnet gas fees are indeed high. If you operate directly on Ethereum, costs can be substantial. A little trick: use assets on the BNB Chain instead, skip the cross-chain step, save money and time.

**Step 2: Lending USD1** — $1-3
It's just a contract call, the fee isn't high.

**Step 3: Cross-chain to a leading exchange** — $2-10
Using the built-in bridge or a third-party bridge makes a big difference here. It's best to compare the costs and speeds of various bridges yourself to avoid being exploited.

**Step 4: Trading and Subscription** — about $10 (0.1% fee)
This is the spot trading fee. A little tip: use BUSD or USDT trading pairs with zero fees to save a fee.

**Step 5: Redeem at maturity + reverse cross-chain** — $5-20
Costs are similar to the previous two steps.

**Step 6: Repay loan + retrieve collateral** — $5-15
Final contract call.

**Total cost per operation: $28-73**
Fees fluctuate depending on network conditions.

## What Do Real Returns Look Like?

Alright, now let's do a real calculation. Suppose you start with 10,000 USDT, borrow 5,000 USD1, and arbitrage for 30 days.

**Gross profit**: 5,000 × (20% ÷ 365 × 30) ≈ $82

**Net profit**: 82 - 50( average cost) ≈ $32

**What does this $32 mean?**
Annualized net yield: (32 × 12) ÷ 10,000 ≈ **3.86%**

## The Reality Can Be a Bit Harsh

You’ll find that all the intermediate costs completely change the appearance of your returns. From "annualized 18%" down to "annualized 3.86%", shrinking more than half. And this doesn't even include:

- Market volatility risk
- Price slippage
- Occasional high gas fee periods

So, on-chain arbitrage is **not unprofitable**, but you must carefully account for every fee. Some optimization (like route selection, trading pair choice) can improve your returns, but don’t expect any magic to make fees disappear out of thin air.

This is the current state of on-chain finance—transparent and efficient, but also painfully real.