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add arbitrage algorithms

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dr. mia von steinkirch, phd 2023-02-10 08:31:07 -08:00 • committed by GitHub
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MEV_strategies/arbitrage/README.md
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<br>
* in tradefi, arbitrage refers to buying something on one venue and selling it on another (through a series of intermediate transactions) for a higher price. this is note risk-free as prices can move mid-transaction.
due to the nature of the evm's atomic execution, **atomic arbitrages** are possible (as opposed to tradefi): smart contracts allow the packaging a sequential execution of txs, for a set of conditions. if the conditions are not met, the execution can fail, undoing all the on-chain interactions that just occurred.
* since **liquidity on-chain is fragmented** (thousands of pools don't communicate with each other, each providing quotes for swapping assets in real-time), it 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.
* due to the nature of the evm's atomic execution, **atomic arbitrages** are possible (as opposed to tradefi): smart contracts allow the packaging a sequential execution of txs, for a set of conditions. if the conditions are not met, the execution can fail, undoing all the on-chain interactions that just occurred.
##### [arbitrage types:](https://mirror.xyz/0xc19565163aFdEe3783FC970E4Bd0275B11848d34/a_v8f9yRqRFAvmOaEltTkPJSt1geSAwQdDps2Avb-DA)
* spatial (exchanges are located in different locations)
* triangular (profit from trading loops)
* statistical (rely on mathematical models for high-frequency arbs)
* cross-exchange
* sandwich
<br>
<img width="350" src="https://user-images.githubusercontent.com/1130416/217386455-c829a750-3bf1-4786-899d-adcb7d816573.png">
* **non-atomic (cross-chain, CEX/DEX, etc.) arb** are more profitable and less accessible due capital requirements and risk profile.
<br>
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<br>
* [arbitrage patterns](patterns)
* [arbitrage algorithms](algorithm)
* [cool arb txs in the wild](mev_bots_wild)