💵Arbitrage

Buy Low, Sell High.

When Arbitrage Opportunities occur:

Arbitrage is a trading strategy that takes advantage of price differences for the same asset across different markets. By simultaneously buying low in one market and selling high in another, traders can lock in a risk-free profit. Arbitrage opportunities typically arise due to market inefficiencies, and they are usually short-lived as prices quickly adjust to eliminate the disparity.

• Liquidity Imbalances: When liquidity pools are thin or fragmented, the prices of the original asset and its synthetic Den can diverge significantly, creating massive arbitrage opportunities.

• Market Timing Inefficiencies: Events such as liquidations, significant events, large transactions(e.g., the German Government selling Bitcoin, CEX implosions, black swan events), or external shocks (e.g., major news events) often cause temporary price discrepancies, which Arbera can exploit.

• Continuous Fee Generation:

  Volatility farming doesn’t rely on specific market trends. Instead, it takes advantage of the inherent price movements present in all markets:

  • Bull Market: Rising prices create arbitrage opportunities as assets may be mispriced across markets.

  • Bear Market: Falling prices lead to similar results between original and synthetic assets.

  • Sideways Market: Even in periods of relative stability, micro-fluctuations in asset prices provide constant opportunities for arbitrage.

Arbitrage Examples

Below are two paths for arbitrageurs and MEV searchers to make successful arbitrage and to illustrate when and how these are taxed for the benefit of Den token holders, PL Stakers, and ARBERA tokens.

When brTOKEN is cheaper than TOKEN

No	Action	Result
1.	Buy brTOKEN	Buy brTOKEN (pay fee), distribute fees.
2.	Unwrap to TOKEN	Burn brTOKEN (pay fee), receive brTOKEN, distribute fees.
3.	Sell TOKEN for profit	Arbitrage Profit

When TOKEN is cheaper than brTOKEN

No	Action	Result
1.	Buy TOKEN	Buy pressure on TOKEN
2.	Wrap to brTOKEN	Create brTOKEN(fee, buy ARBERA, distribute fees.
3.	Sell brTOKEN for profit	Burn brTOKEN, buy ARBERA, distribute fees.