The project incorporates a platform that allows for building a Defi Arbitrage system.
This includes the following key features:
⦁ Opportunity Finding System
⦁ MEV Bot
⦁ Automated Trading
⦁ Risk Management
⦁ Real-time Monitoring and Reporting
Opportunity Finding:
The ability to view the DeFi market for profitable arbitrage opportunities, based on price change and liquidity differences across various decentralized exchanges (DEXs). This involves selection of Chain and Dex’s to identify opportunities. Top Chains and DEXs include:
⦁ ETH - Uniswap V3, V2, Shibaswap
⦁ BSC - Pancakeswap V3, V2, Boneswap
⦁ POLY/MATIC - Quickswap (might be optional)
Flash Loan Provider:
Once a profitable opportunity is identified, we need to obtain a flash loan from a DeFi lending protocol to access the necessary funds.
Some platforms that allow flash loans are:
⦁ Balancer
⦁ Aave
⦁ Compound
⦁ Maker
MEV Bot:
We need to implement a MEV (Miner Extractable Value) Bot, which allows us to capture the transactions that are received by miners and modify the order of transactions by placing an order before the user’s transactions.
MEV Bot can be used in combination with flash loans to maximize profits from arbitrage trades. By using a flash loan to obtain the necessary funds, we can execute trades and capture MEV opportunities with minimal capital requirements.
Automated Trading Bot and Reporting Process:
For us to achieve automated trading a few strategies can be implemented, such as running the bot running the bot locally in combination of running on the servers which does the following:
⦁ Server run continuously to get opportunities
⦁ Notifies the local machine about the opportunity via REST or websocket or any other messaging protocol
⦁ Local machine holds the private keys and the ownership of a contract/address
⦁ Local machine builds and executes the trading flow - flash loan - swaps - return flash loan within the same transaction
⦁ Local Machine notifies the server about the trade with the txn Id
⦁ Server records the txn and does the analytics of the trade by decoding the transaction
⦁ Server generates a report that is visible on a web based panel about every trade that is performed as well as analytics on Profit and Loss.
DELIVERABLES
The Tech Execution of the system will include the key deliverables as follows:
⦁ Backend Opportunity Finding
⦁ Local Machine Trading Bot
⦁ Web Based Admin Panel
Best regards.