A Typical Arbitrage Example
Last updated
Last updated
A typical Arbitrage example involves 3 tokens and 3 liquidity pools identified by EigenPhi:
We use the six steps mentioned earlier to determine whether a transaction is an Arbitrage:
Steps 1 & 2: Parse the transfers in the transaction and draw a directed graph based on the transfers.
Step 3: Identify the strongly connected components in the graph and create a combined transfer table based on it.
The result is that the original graph is the strongly connected components.
Then we can create a combined transfer table based on the graph above.
From
To
Asset
Amount
MEV Bot 0x80d
SushiSwap USDC 0x397
USDC
76860.06
SushiSwap USDC 0x397
SushiSwap USDT 0x06d
WETH
38.232
SushiSwap USDT 0x06d
MEV Bot 0x80d
USDT
77666.66
Uniswap V3 USDC-USDT 0x785
MEV Bot 0x80d
USDC
77406.53
MEV Bot 0x80d
Uniswap V3 USDC-USDT 0x785
USDT
77666.66
The TransferTable of the transaction:
USDC
WETH
USDT
MEV Bot 0x80d
-76860.06
SushiSwap USDC 0x397
+76860.06
SushiSwap USDC 0x397
-38.232
SushiSwap USDT 0x06d
+38.232
SushiSwap USDT 0x06d
-77666.66
MEV Bot 0x80d
+77666.66
Uniswap V3 USDC-USDT 0x785
-77406.53
MEV Bot 0x80d
+77406.53
MEV Bot 0x80d
-77666.66
Uniswap V3 USDC-USDT 0x785
+77666.66
The resulted CombinedTransferTable:
Address
USDC
WETH
USDT
Trade?
SushiSwap USDC 0x397
76860.06
-38.232
True
SushiSwap USDT 0x06d
38.232
-77666.66
True
Uniswap V3 USDC-USDT 0x785
-77406.53
77666.66
True
MEV Bot 0x80d
546.47
False
Step 4: Find the closest point to the "from" or "to" address of the transaction in the above strongly connected components.
In view that the "to" address is already in the graph, the closest point is the "to" address itself.
Steps 5 & 6: Calculate the profit of the point (Address) in Step 4, and determine whether it is positive.
(77,406.53 - 76,860.06) USDC + (77,666.66 - 77,666.66) USDT > 0
Therefore, we identify this transaction as an Arbitrage.
