Foot to Foot #2 Searching For Arbitrage
Today's article was written by a fellow Footballer: How multi-chain brings opportunity to the watchful eye.
The next time you are browsing a token on Coin Gecko scroll down to the “Markets” section and you’ll notice various exchanges where the token is trading. Take a look at the following screen shot (taken 11/28) that shows the price of Popsicle Finance (ICE) in five trading pairs across three different chains.
You could be paying quite a premium depending on what pair/chain you go for.
Remember to always take advantage of the information available to you before just diving right into a trade. You can further validate what you’re seeing by actually navigating to each swap shop and simulating buying a token worth of your next investment choice without actually transmitting (as Hal pointed out with WasabiBoatResearch in Foot Guns’ latest private pod, “Curve your Enthusiasm”).
The above example represents just over a 3% price opportunity, and we’ve witnessed far better than this in the past (above was just a random spot check). Watch out for potential foot guns such as gas fees – which need to be taken into account as well, each scenario will depend on more than just the spreads themselves, so be careful.
Another factor would be the slippage. You can see in the above image the -2% and +2% depth of the market. This is telling you how much slippage you’ll experience in a single swap depending on the size of the trade. It’s almost always best to go with the highest volume, largest depth exchange unless you see a profitable arbitrage. Note that there are many arbitrage bots in crypto, so you will most likely not find actionable arbitrage on high marketcap, popular tokens.
Don’t forget about the wealth of information available within the Coin Gecko platform either. Many tokens trade on more than one chain, take a look at the Curve DAO token for instance:
Curve DAO is listed on four additional chains in addition to ETH (if you click the “Chainlist” link you’ll see it’s on even more chains). Maybe you already have stablecoins parked on one of those cheaper gas alternatives and you want to farm CRV with it?
Lastly, remember to stop over in the Foot Guns discord where we discuss all the latest breaking crypto trades, ideas, and technical indicators – as well as where we get a temperature check of the crypto space from our community members. We also love to brag about our FGNEWS token share in the ENS airdrop we decided to HODL, and of course - the new Spacing Guild, channel formats, and latest FGNEWS NFT investment: Cha Yon 차연#9978. The community keeps growing and we’re excited about what we’re building together – all while we look forward to helping you with your next trade.