diff --git a/MEV_searchers/bots/stat-arbers.md b/MEV_searchers/bots/stat-arbers.md index eaed01e..66c6ae3 100644 --- a/MEV_searchers/bots/stat-arbers.md +++ b/MEV_searchers/bots/stat-arbers.md @@ -1,4 +1,28 @@ -### statistical arbers +## statistical arbers + +<br> + +### tl; dr for a strategy + +<br> + +* 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 + + + +<br> + +--- + +### resources + +<br> * [cointegrator bots](https://github.com/go-outside-labs/blockchain-science-py)