How My Friend Made $160,000 Last Month from Arbitrage 🚀
He used GPT-4 to develop the system. Here’s how he did it 🧵👇
Understanding Arbitrage:
- Arbitrage involves profiting from price differences between two platforms.
- New tokens and presales create high volatility, offering profit opportunities.
Automating Arbitrage with GPT-4:
- My friend, not a developer but skilled with prompts, automated this process.
- Anyone can create an arbitrage bot using this method.
Types of Arbitrage:
1. DEX ⇆ CEX
2. DEX ⇆ DEX
3. CEX ⇆ CEX
4. Complex forms involving multiple DEXs or CEXs
Key Events Creating Arbitrage Opportunities:
- Listings
- Token migrations
- Hacks
CEX - CEX Arbitrage:
- Competitive due to market makers, but opportunities arise when their bots fail.
- Potential Issues:
- Closed deposits/withdrawals
- Account blockage and frozen funds
- Requirement:
- Verified KYC accounts on major exchanges like Binance.
DEX - DEX Arbitrage:
- Challenge: MEV bots on one network
- Strategy: Use DEXs with their own pools and bridges across networks
- Steps:
- Get API from DEXs
- Use GPT-4 to create a structure covering each DEX and bridge
- Prepare trading logic (e.g., buy on DEX1, bridge, sell on DEX2)
- Potential Issues:
- Lack of liquidity
- Token migration
- High slippage
- Preparation:
- Deposit native tokens to popular networks (Solana, Ethereum, Base, Arbitrum, Optimism, BSC)
- Pre-approve protocols to expedite transactions
DEX - CEX Arbitrage:
- Scenario: Price discrepancies between DEXs and CEXs
- Example: An Indian exchange hack caused a 5% spread between DEXs and CEXs for FLOKI and PEPE.
- **Action:** Combine scripts from previous parts into one cohesive program
Final Thoughts:
- This thread covers only the basics.
- To succeed:
- Dive deep into protocols and possible routes
- Research thoroughly
- The hard work will yield incredible rewards.
