What are Arbitrage Loops?
Arbitrage loops can be thought of as chained loops that execute configured sequences of cross-chain bridging via the Glitter SDK and subsequent swap operations over the SDKs of decentralised exchanges. These loops are configured to execute every few minutes and in essence this enables operations to execute using strategies like the following:
- 1.Bridge from a cryptocurrency on a given network (such as ALGO on Algorand) to a wrapped token on another network (such as xALGO on Solana) via the Glitter SDK.
- 2.Swap the wrapped token from the previous step (e.g. xALGO) for a given network’s primary currency (such as SOL on Solana) in a liquidity pool via an exchange SDK (such as the Raydium SDK).
- 3.Bridge the token (e.g. SOL) received at the previous step via the Glitter SDK to obtain another network’s wrapped currency (in this case xSOL on Algorand).
- 4.To complete the loop, swap the wrapped token (i.e xSOL on Alogrand) for a network’s primary currency (ALGO) using an exchange SDK (such as the Tinyman SDK).
We have deemed loops like the one above the “Wrapped Token Arbitrage” strategy of performing token arbitrage, and aim to explore and develop upon this initial approach going forward. Further strategies and protocols are coming soon!