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Guide to Blockchain Arbitrage Trading Bots

May 23, 2025

Blockchain Arbitrage Trading Bots with Flash Loans

Introduction

  • Blockchain allows the creation of arbitrage-based crypto trading bots using flash loans.
  • A developer claimed to make over $20,000 in 7 days with such bots.
  • The video guide aims to teach how to create a profitable arbitrage bot.

Key Concepts

  • Arbitrage: Buying cryptocurrency on one exchange and selling on another for profit.
  • Avoid centralized exchanges (e.g., Binance, Coinbase) due to price movement.
  • Use decentralized exchanges (DEXs) like Uniswap or PancakeSwap.

Benefits of Using Blockchain-based Bots

  • No personal funds required; utilize flash loans.
  • Smart contracts ensure no loss of borrowed money.

Steps to Create an Arbitrage Bot

Step 1: Choose a Blockchain

  • Must support many tokens and exchanges.
  • Should support flash loans and be EVM compatible.
  • Examples: Ethereum, BSC, Tron, Arbitrum.

Step 2: Select Exchanges

  • Choose two DEXs for arbitrage, e.g., Uniswap and PancakeSwap.
  • Both have similar code interfaces, high liquidity, and are deployed on multiple blockchains.

Step 3: Select Token Trading Pairs

  • Research using Etherscan and DEX Explorer tools like Dex Screener.
  • Ensure tokens are ERC20 and exist on the same blockchain.
  • Use wrapped versions of native tokens (e.g., WETH for Ethereum).

Step 4: Choose a Flash Loan Provider

  • Flash loans allow borrowing large sums with no upfront payment.
  • Recommended provider: Balancer due to ease of setup and no fees.

Step 5: Create Smart Contract for Arbitrage

  • Implement the trading logic within smart contracts.
  • Example: Use Uniswap V3’s swap functionality within smart contracts.

Step 6: Develop a Searcher Bot

  • The bot runs off-chain, monitoring market opportunities.
  • Use Node.js and Ethers.js to detect swap events and execute trades.
  • Calculate price differences, including gas fees, for profitability.

This guide covers setting up a blockchain-based arbitrage bot using flash loans, selecting suitable blockchains and exchanges, implementing smart contracts, and monitoring trades through coding. For an in-depth setup, participation in the masterclass is recommended.

Full transcript