[nerf0]

Not financial advice. Numbers are just examples.

0: Buy 10000 USDC with $10000

1: Deposit 10000 USDC on AAVE

2: Borrow 5000 USDT

3: Sell 5000 USDT for 5000 USDC

4: Wait for USDT to drop to $0.5

5: Buy 5000 USDT with 2500 USDC

6: Repay 5000 USDT and get back 10000 USDC

7: Profit: $2500

[mkj]

That won't work if USDC also drops?

[nerf0]

Correct. Here I'm assuming USDC is "stable".

If USDC drops (or if USDT rises, for that matter), you might get liquidated.

[vizzah]

interest on borrowing? How much it costs to keep the position per year?

[nerf0]

Depends on market conditions and the lender you use. Currently around 4% on AAVE. If demand rises this can go up obviously.

Note you do get interest on your deposit so that helps offset it a bit.