LSDArbiBot

Screenshots

Problem Statement

This project contributes to an efficient market for Liquid Staking Derivatives (LSDs) between the unshETH AMM and Curve AMM. It currently performs arbitrage between cbETH and rETH on both DEX's and will enable extra LSDs in the future. The arbitrage works through a flashloan on Aave V3 and will only execute if profitable.

Solution

The arbitrage bot operates on Ethereum. A smart contract has been deployed in order to use flashloans with Aave V3. The arbitrage opportunities are calculated off-chain, for every run the profitability is assessed including: gas price, gas used by transaction, trading fees, imbalances in the pools and fee paid on the flashloan. Only profitable transactions are executed. A flashloan will always be taken on WETH, the transaction will then occur by buying the LSD on one side (where cheapest compared to WETH) and selling it on the other side vdAMM<>Curve. The bot will also calculate the optimal amount of WETH to provide for the arbitrage, incrementing the amount of WETH as long as the total profit keeps increasing.