An arbitrage strategy involves simultaneously buying and selling an asset in different markets to profit from a price discrepancy. In digital asset markets, this often means exploiting minor price differences across various exchanges. Automated bots frequently execute these operations with high speed. This activity contributes to market efficiency by correcting price imbalances.
Context
Arbitrage is a fundamental activity in the cryptocurrency market, driven by the fragmented nature of digital asset exchanges. News reports often mention arbitrage opportunities as a factor influencing price convergence across platforms. The rapid execution of these strategies by sophisticated trading algorithms minimizes price differences quickly. Understanding arbitrage helps explain short-term price movements and the operational dynamics of crypto trading venues.
A new mechanism auctions a guaranteed time advantage for transaction inclusion, transforming competitive latency-based MEV extraction into an economically efficient, auction-driven value capture system.
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