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<br> <br>
* liquidity on-chain is fragmented: there are thousands of uniswap-like pools that don't communicate with each other, each providing quotes for swapping assets in real time. fragmented liquidity creates opportunity to buy low and sell high accross different pools. * liquidity on-chain is fragmented: thousands of pools don't communicate with each other, each providing quotes for swapping assets in real-time. This fragmentation creates an opportunity to buy low and sell high across different pools.
* for example, two DEXes offer a token at two different prices so that a token can be bought at the lower-priced DEX and sold on the higher-priced DEX in a single atomic transaction.
* arbitrage refers to the simultaneous buying and selling of tokens in different markets
in order to take advantage of price discrepancies of that asset.
* the simplest MEV opportunity: two DEXes offering a token at two different prices, someone can buy the token on the lower-priced DEX and sell it on the higher priced DEX in a single atomic transaction.
* atomicity is what makes things different in defi: the blockchain's state updates on a block-by-block basis, which means that a tx can perform multiple actions, provided that the end state of the tx is correct (flash loans)
* most of the atomic arbitrage space is dominated by a few addresses, who land most of the profitable arbs. this is a very competitive space, and success is derived from a mixture of cleverness, low latency and good infrastructure.
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