EthereumZuri.ch 2025

Cross-chain Arbitrages in the Realm of Blockchain Interoperability
01-30, 13:15–14:00 (Europe/Zurich), Beacon Stage

The past few years have witnessed a surge in Ethereum-compatible networks, driven by the Ethereum community's roll-up-centric roadmap. These networks alleviate execution load from the expensive and slow Ethereum Layer-1 network, utilizing Ethereum as a data availability layer. While this transition benefits users by reducing fees and improving inclusion speed, it also fragments liquidity. This fragmentation poses a critical challenge for Decentralized Exchanges (DEXes) operating across these networks, which offer the same assets but suffer from price discrepancies due to a lack of synchronization. Currently, arbitraging between DEXes on different networks cannot be performed atomically. This study investigates the strategies employed by arbitrageurs to capitalize on price differences among DEXes across various chains. We identify two non-atomic arbitrage strategies: BRIDGE-ARB, which utilizes asset bridges between chains, and REBALANCE-ARB, which involves simultaneous, opposite-direction trades on the networks. We analyze the effectiveness of these strategies across seven different networks against Ethereum over a one-year period from September 2023 to August 2024.

Ph.D. candidate at the Technical University of Munich & Researcher at Flashbots