Thread by @the_smart_ape

🔥🚀 ULTIMATE ARBITRAGE GUIDE! 💰💎

Crypto arbitrage is the fast lane to making huge profits! 💸

I spent months working on arbitrage and coding smart contracts. 📘

Here are 4 arbitrage strategies (simple and complex) you can use to make earnings. 💰

🧵

Arbitrage involves taking advantage of the price difference between two exchanges (centralized or decentralized). The idea is to buy where the price is low and sell where the price is high. The more volatile the market, the more opportunities there are.

1/

During the Terra and FTX crises, I made incredible gains using these arbitrage strategies.

They are effective in periods when the market is disrupted, whether it's going up or down.

Here are 4 strategies explained (the last one is the best). 👇

2/

Strategy 1:
This is the simplest strategy, which involves taking advantage of price differences between different DEXs.

To keep it simple, this research is done manually. You can use @dexscreener to manually scan prices and find differences between DEXs.

3/

If the price difference is significant, you can buy for example $WBTC on DEX A and sell it on DEX B.

You can even do it on different blockchains (buy on #Ethereum and sell on #Polygon). Be cautious of gas fees in this case.

4/

Under normal circumstances, you won't make profits with this strategy because it is too manual.

But during times of volatility (significant price fluctuations, FUD, major issues, etc.), you can make gains with this simple strategy! I've done it before!

5/

Strategy 2:
The second strategy is similar to the first one, you do it on CEXs.

You can use @CoinMarketCap to scan crypto prices on different exchanges and find differences.

Interact only with CEXs that have a HIGH confidence level.

6/

You need to: 👇

7/

You will find more opportunities on CEXs than DEXs, but it's slightly riskier on CEXs.

Many CEXs are scams and freeze users' funds. That's why you should only interact with CEXs marked as HIGH confidence on Coinmarketcap.

8/

Strategy 3:
Strategy 3 is the same as Strategy 2, only you’ll use an arbitrage bot.

Arbitrage bots scan crypto prices on different CEXs, and once an opportunity is found, they automatically perform the buying and selling operations.

9/

There are numerous platforms that offer such services, usually for a fee.

Here are some informative examples, but you can find others by searching on your own:
- @pionex_com
- @cryptohopper
- @CoinRuleHQ
- @trality_bots

10/

Personally, I'm not a fan of this strategy because:
- It is not decentralized.
- Bots don't monitor all exchanges; they only cover a few.

However, I know people who have made money using this type of bot.

Let’s see the strategy I recommend you to perform!

11/

Strategy 4 :
For me, this is the best way to do arbitrage, it's the one I've been using for a while.

This strategy involves automatically taking advantage of price differences between two DEXs using smart contracts!

12/

This strategy is not simple, but it's the most effective way to capitalize on arbitrage opportunities.

A smart contract acts as an arbitrage bot for DEXs. You have complete control over what your smart contract does, and it's entirely decentralized.

13/

You don't need to be highly skilled in Solidity to launch your first arbitrage smart contract.

With some work and a basic understanding of Solidity, you can launch your first arbitrage contract within a few weeks.

14/

Initially, the smart contract may not generate a significant amount of profits, but as you improve it over time, it will be able to capitalize on more opportunities and generate more profits!

15/

Here are the 3 steps to follow:
1- Deploy the buy and sell smart contract (1).
2- Write a script to retrieve prices from DEXs (2).
3- Write a script that connects (1) and (2) to perform automatic buying and selling.

16/

STEP1 :
This step involves deploying the smart contract that contains functions for buying tokens on DEX A and selling them on DEX B.

17/

The function looks like this:
- Rooter1,2: DEX addresses.
- The last command « require » is crucial as it cancels the operation if no profit is made, ensuring that you don't incur losses if the function is called.

18/

STEP 2: This step involves using a script to communicate with different DEXs to obtain price quotations.

By running this script for a token pair and two DEXs, you'll get the following results in seconds:

19/

We don't do that in the smart contract to avoid paying higher gas fees.

Instead, we use a JavaScript script to retrieve the different prices without incurring any gas fees. This script will enable you to scan prices in search of opportunities.

20/

STEP 3: The final step is to write a script that runs the function from step (2) continuously, 24/7, on many DEXs and token pairs.

If an opportunity is found, this final script calls the smart contract function to execute the dual swap.

21/

If I run this script, it will continuously scan the specified DEXs and pairs.

For example, if I provide multiple pairs on DEXs like @Uniswap and @SushiSwap, the script will search for opportunities until it finds one.

22/

If you're interested in these script sets, let me know in the comments, and I can share them with you on my TG channel.

23/

There are 3 drawbacks to implementing automatic arbitrage like this:
1. The script needs to run 24/7, so it requires a dedicated machine that is always on.

You can run it on an external server.

24/

Personally, I run this type of script on a Raspberry Pi, which avoid me from using the resources of my PC and running it on a small device that only costs $50.

25/

2. Gas fee optimization: The competition among arbitrageurs is fierce, and to have a chance, you need to optimize gas fee consumption.

This script is not specifically optimized for gas fees, but we will address that in another thread.

26/

3. Leverage: It is possible to combine this strategy with a FlashLoan to increase the initial investment and generate more gains without taking risks.

We will also discuss this in another thread, it’s super important to make large gains.

27/

These 4 strategies can help you make significant profits during periods of volatility, but in normal times, only the optimized last strategy can generate gains.

This is the strategy you should focus on, and we will further optimize it in upcoming threads.

28/

Tell me if this topic interests you, If you're interested, I will create more THREADs on optimizing gas fees and combining them with Flashloans.

Make sure to join Telegram for the recent alpha! 👇

29/

Mention some CTs friends:
@0xFinish
@CryptoGideon_
@belizardd
@nobrainflip
@ardizor
@Donnadelcrypto
@FarmerTuHao
@dazai_0x
@CryptoStreamHub
@ModestusOkoye
@splinter0n
@DeFi_Finest
@Moomsxxx

Tagging these gigachads you can follow
@CryptoShiro_
@rektdiomedes
@Deebs_DeFi
@TheDeFISaint
@poopmandefi
@defiprincess_
@CryptoKoryo
@_BillionAireSon
@0xTindorr
@I_am_patrimonio
@Hercules_Defi
@Only1temmy
@wacy_time1
@jake_pahor
@arndxt_xo
@0xSalazar

@CryptoShiro_ @rektdiomedes @Deebs_DeFi @TheDeFISaint @poopmandefi @defiprincess_ @CryptoKoryo @_BillionAireSon @0xTindorr @I_am_patrimonio @Hercules_Defi @Only1temmy @wacy_time1 @jake_pahor @arndxt_xo @0xSalazar That's a wrap!

If you enjoyed this thread:

1. Follow me @the_smart_ape for more of these
2. RT the tweet below to share this thread with your audience

https://twitter.com/1512594021654401027/status/1670440720329592832