DeFi lending arbitrage sounds enticing, but the risk chain behind it needs to be clarified.

The process is actually not complicated: exchange USDT for U, then use U as collateral to borrow USD1 to earn the interest spread. It sounds simple, but the actual operational risks increase layer by layer.

First, let's talk about the conversion step. Exchanging USDT for U indeed carries minimal risk, but it is not zero. The exchange between stablecoins involves factors like slippage and liquidity, which are micro risks.

Where does the real profit come from? You collateralize U to borrow USD1 at an annual interest rate of about 7%, while a leading exchange offers an annual rate of 20%. On the surface, the arbitrage space is 13%. But there is a trap— to get that 20%, you need to continue investing the funds into the exchange's liquidity mining. The entire chain lengthens, and the risks increase exponentially.

There are two other risks you must be vigilant about:

**Risk One: Protocol Security**. Lending protocols like LISTADAO have experienced hacker attacks (there are precedents from years ago). Although the incidents have passed, history can repeat itself. Assets collateralized on such platforms are at risk if the smart contract has vulnerabilities or is attacked.

**Risk Two: Liquidity Risk**. During severe market volatility, you may face forced liquidation or difficulty withdrawing funds. This is not just a theoretical risk; it is a real operational risk.

Therefore, what seems like a simple 13% arbitrage profit is actually using principal to exchange for a complex risk combination. Whether it is worth it or not depends on your own risk assessment.