Aqua Ecosystem
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  • Aggreg8
    • What is Aggreg8?
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      • Data Aggregation & Analysis Layer / Transaction Pool Formation
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      • Introduction to Arbitrage
    • Use Case
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  • Use Case 1 - On-Chain Arbitrage
  • Use Case 2 - Cross-Chain Arbitrage
  1. Arbix

Use Case

PreviousIntroduction to Arbitrage

Last updated 7 months ago

Please, note that this part explains the use case from a simplified point of view in order to understand how basics work.

The following part provides for 2 use cases for your reference:

  1. On-chain Arbitrage - performance of simple arbitrage using Arbix liquidity pools on-chain.

  2. Cross-Chain Arbitrage - performance of simple arbitrage using Arbix multi-chain liquidity pools cross-chain.

Use Case 1 - On-Chain Arbitrage

User A deposits 3,000 USDT into the USDT Pool on Network X on Arbix and instead receives a liquidity token. Simultaneously, User B deposits 1 ETH into the ETH Pool on Network X and as well receives a respective liquidity token. Users’ deposits are generating real yield APRs and they can use liquidity tokens received on secondary markets.

Meanwhile, an arbitrage contract detects price discrepancies between ETH and USDT across DEXs on Network X - DEX A and DEX B. For example, the contract sees that on the DEX A 1 ETH is worth 3,050 USDT, while on DEX B the price for 1 ETH is 3,000 USDT.

The contract swaps USDT for ETH on DEX A for 3,000 and ETH for USDT for 3,050 on DEX B, hence, performing a 50 USDT income. The price difference, which is a consequence of the arbitrage performed, is converted into $AQUA tokens and distributed to users as APR rewards. The vaults are respectively rebalanced via Quotex.

Please note that this is a hypothetical example, and all risks associated with arbitrage opportunities, such as price impact and other potential factors, are accounted for in the logic of the respective contracts.

Use Case 2 - Cross-Chain Arbitrage

User A deposits 3,000 USDT into the USDT Pool on Network X on Arbix and instead receives a liquidity token. Simultaneously, User B deposits 1 ETH into the ETH Pool on Network Y and as well receives a respective liquidity token. Users’ deposits are generating real yield APRs and they can use liquidity tokens received on secondary markets.

Meanwhile, an arbitrage contract detects price discrepancies between ETH and USDT across DEXs on Network X and Y. For example, the contract sees that on the DEX on Network Y 1 ETH is worth 3,200 USDT, while on Network X the price for 1 ETH is 3,000 USDT.

The contract swaps USDT for ETH on Network X for 3,000 and ETH for USDT for 3,200 on Network Y, hence, performing a 200 USDT income. The price difference, which is a consequence of the arbitrage performed, is converted into $AQUA tokens and distributed to users as APR rewards. The vaults are respectively rebalanced via Quotex.

Please note that this is a hypothetical example, and all risks associated with arbitrage opportunities, such as price impact and other potential factors, are accounted for in the logic of the respective contracts.