Arbitrage: Atomic, Cross-DEX, Cross-Chain

The arbitrage taxonomy. Atomic on-chain arbs via flash loans, cross-DEX with inventory, cross-chain with bridge latency, and the pseudocode that ties it together.

35 min · expert · part of MEV Searcher Strategies

Arbitrage Is the Constructive Core of MEV

If you ask any honest searcher which strategy they would defend in front of a Senate hearing, the answer is arbitrage. Closing a price gap between two markets is the same activity that NYSE specialists, FX banks, and ETF authorized participants have done for decades. The mechanism is different on a blockchain — open competition, public mempool, flash loans — but the social function is identical: prices reconcile, spreads tighten, and the marginal user gets a better fill. By Eigenphi and Flashbots data, atomic arbitrage routinely accounts for 30-50% of measurable Ethereum MEV by dollar value in any given month, with the exact share moving as sandwich activity, liquidations, and CEX/DEX arbitrage shift. On Solana, arbitrage's share is even larger because the validator-rotation dynamics make sandwich attacks less consistently profitable. This lesson breaks arbitrage into three categories: **atomic on-chain** (executes in a single transaction, zero inventory risk, financed by flash loans), **cross-DEX with inventory** (requires holding capital on both sides, allows multi-block execution and richer strategies), and **cross-chain** (requires bridge or messaging latency, introduces real settlement risk). Each category has different infrastructure needs and different risk profiles. You will see real protocol names — Uniswap v2/v3/v4, Curve, Balancer, PancakeSwap, Aerodrome, Raydium, Orca — because the practical details of arbitrage depend heavily on each AMM's pricing curve. A searcher who treats every pool as the same x*y=k loses to the searcher who knows that Curve's stableswap behaves nothing like Uniswap v2 outside a narrow band around peg.

Also in this lesson

Atomic Arbitrage: Same Block, Same Transaction
Cross-DEX with Inventory: The Other 50%
Cross-Chain Arbitrage: The Hardest Case
Complete Atomic Arb Pseudocode

Key terms

Atomic arbitrage: Arbitrage executed in a single transaction — flash loan, swap, swap, repay — with the entire transaction reverting if any leg fails. Zero principal risk to the searcher; only gas is lost.
Flash loan: A loan that must be repaid in the same transaction. Aave V3 (0.05% fee), Balancer (free), MakerDAO, and Uniswap v3 callbacks all offer flash loans. Enables capital-free MEV extraction.
Inventory arbitrage: Arbitrage that requires the searcher to hold capital on both sides of the trade because the legs cannot execute atomically. Higher gross margin, higher risk; resembles market-making more than pure-play MEV.
Cross-chain arbitrage: Arbitrage across distinct blockchains, mediated by bridges or messaging protocols. Higher margins than intra-chain because competition is thinner, but exposed to bridge settlement risk.
Triangle arbitrage: Multi-hop atomic arbitrage involving three or more legs (e.g., USDC->WETH on Uniswap, WETH->stETH on Curve, stETH->USDC on Balancer). Larger search space; less crowded competition.
CEX/DEX arbitrage: Arbitrage between a centralized exchange (Binance, OKX) and a DEX (Uniswap, Curve). Operationally similar to cross-chain arb but the off-chain leg is on a CEX API rather than a bridge.
Across: A UMA-based cross-chain bridge with prefunded relayer liquidity. Typical 1-3 minute settlement; favored by cross-chain arb searchers for its speed/cost tradeoff.
Optimal arb size: The trade size that maximizes captured profit given the two pools' pricing curves. Smaller than draining the cheap pool entirely — because slippage grows with size — and solved analytically per pool type (constant product, stableswap, Balancer weighted).
Intent-based execution: A protocol model (CowSwap, UniswapX, Across) where users state a desired outcome and solvers compete to fulfill it. Wraps searcher-like infrastructure in a user-friendly interface that delivers better fills.

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Educational only — not financial advice.