From 0c365e82d496308696cf8a045e38cac2b2795953 Mon Sep 17 00:00:00 2001 From: "dr. mia von steinkirch, phd" <1130416+mvonsteinkirch@users.noreply.github.com> Date: Thu, 9 Feb 2023 16:58:18 -0800 Subject: [PATCH] Update stat-arbers.md --- MEV_searchers/bots/stat-arbers.md | 11 +++-------- 1 file changed, 3 insertions(+), 8 deletions(-) diff --git a/MEV_searchers/bots/stat-arbers.md b/MEV_searchers/bots/stat-arbers.md index 66c6ae3..0c1b00b 100644 --- a/MEV_searchers/bots/stat-arbers.md +++ b/MEV_searchers/bots/stat-arbers.md @@ -2,17 +2,12 @@
-### tl; dr for a strategy +### tl; dr
-* if CEX is greater than the price on chain (DEX), stat arbs can buy on the DEX and hedge on the CEX -> confident that the DEX price will drift towards the CEX price, but not confident that will happen to the CEX price -* problem: settlement mismatch -> CEX trades are fast but blockchains aren't -> start arbs are unsure if the trade will land or competitors will beat them -* from the time between trade submission and receipt of the next block, the trade (their exposure to the assets) is uncertain -* the greater the uncertainty, the more the profit estimate needs to be marked down -* while volatility of the token is important, the longer the time period between blocks, the longer tx remains, and the longer it can go without being fully hedged -* as block time increases, stat arb MEV profit estimates get marked down -> payments made by stat arbers to miners/validators or to users/traders decrease -* conclusion: the battle between PFOF-style MEV could lead to increase block times for stat arbers, decreasing combined realized MEV +* arb between different chains or markets (e.g. ethereum and binance) +* for instance, if the cex price is greater than the price on-chain, stat arbs can buy on the dex and hedge on the cex. the problem is settlement mismatch: the longer the time period between blocks, the longer tx remains, and the longer it can go without being fully hedged (decreasing combined realized mev).