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Cross-Chain Arbitrage

Very High risk

Arbitrage between the same or equivalent assets priced differently on two separate blockchains.

Illustrative networks

Ethereum
BNB Smart Chain
Polygon
Arbitrum
Optimism
Base

Illustrative venues

PancakeSwap
Uniswap
Bridges (e.g. Stargate, Across)

How it works

1

Detect

Compare the price of a bridged or wrapped asset on two chains.

2

Bridge

Move the asset (or equivalent value) from the cheaper chain to the more expensive one - this takes real time, from seconds to many minutes.

3

Sell

Sell into the more expensive market once the asset arrives.

4

Return capital

Bridge proceeds back if the strategy needs to repeat.

Explanation

Unlike same-chain arbitrage, cross-chain arbitrage cannot happen atomically in one transaction - bridging introduces real delay and its own smart contract risk.

By the time funds arrive on the destination chain, the price gap that motivated the trade may have already closed, or moved further out of favor.

Bridge security is a major independent risk factor: several of the largest hacks in DeFi history have been bridge exploits, separate from any price-arbitrage risk.

FAQ

Why isn't this atomic like flash-loan arbitrage?

Because two separate blockchains cannot be updated inside a single transaction. Bridging requires waiting for confirmations and, often, a separate relayer or validator set.

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