Arbitrage trading within the cryptocurrency ecosystem works by simultaneously buying and selling across several markets (or exchanges) in order to make a profit from the price differences that can be found across different markets.
Our Arbitrage Trading Bots will engage in arbitrage trading between multiple different Ethereum token markets, looking for price fluctuations on various cryptocurrency exchanges. This means that you will be able to automatically take advantage of any price slippage to maximize your profit.
What is arbitrage trading?
If you are a little lost on how an arbitrage trading strategy works, here is an easy to follow example of what a current arbitrage opportunity looks like for Saturn Classic, if you consider our HODL program to be a different market:
- Buy SATURN via our HODL dApp with a maximum bonus, this would make the effective price 0.00004 ETC.
- Sell SATURN on the exchange for a profit.
You can tell by looking at Saturn Classic's sell history that this is currently a popular strategy, notice how sell-offs happen near immediately whenever the price goes above 0.00004 ETC. You can even automate the selling part with our Pricewatch Bot.
Now, this strategy will work perfectly fine manually because it is a strategy that works exclusively on our platform. Token markets on ETC are brand new and for many of them, Saturn Network is the only available exchange - which is why we developed market making bots that look at the internal order book dynamics and are engineered to provide healthy token order books.
Ethereum tokens are traded across numerous exchanges
On ETH, we find a lot of tokens that are traded across centralized and decentralized exchanges. Which is why for tokens that Saturn Network is not a dominant exchange, if we want these markets to grow we need to offer market making and arbitrage bots.
Effectively, people who run arbitrage trading bots will be providing an important service to Saturn Ecosystem: they will inject liquidity and allow our users to buy any token at a competitive price. And people who run arbitrage trading bots will be able to set their fee to ensure they are always paid for providing this service.
For example, you would be able to set your price threshold at 10% and this would ensure that every successful trade would make you 10% profit. Competition between people running our arbitrage bot will ensure that fees are driven down to an optimal level, consequently, Saturn users will enjoy the most friendly experience for buying any ETH token wallet to wallet in one transaction.
Multiple exchanges will be supported
We are currently looking to create arbitrage bots for the following exchanges:
- Coinbase Pro
In the spirit of decentralization, the bot will be open source and available to everyone, ensuring that even our arbitrage service will be decentralized. We will document our development progress so stay tuned for more updates!
And if you would like to see more exchanges supported, please come let us know in the comments what other exchanges we should consider.
Future is bright!