Arbitrage Overview

When swaps are made on a DEX there is price movement - which can create market imbalances and introduce opportunities for arbitrage profit.

Here's an example:

  • Imagine two markets for the liquidity pair ETH/USD. Both markets start out with the same price for ETH.

  • If ETH is bought on market A the price there becomes higher.

  • ETH can then be bought on market B and sold for more on market A to produce an arbitrage profit.

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