Situations within a blockchain-based market where asset prices do not accurately reflect all available information or where risk-free profit opportunities exist. These inefficiencies can arise from liquidity fragmentation, network congestion, or delays in price updates across decentralized exchanges. Arbitrageurs typically exploit these discrepancies, thereby contributing to market price discovery. Such conditions can present opportunities for sophisticated traders.
Context
On-chain market inefficiency is a recurring theme in crypto news, especially concerning decentralized finance (DeFi) and the performance of automated market makers. Reports often detail how MEV bots or sophisticated traders capitalize on these temporary price divergences. Efforts to reduce these inefficiencies through improved protocol design or aggregated liquidity solutions are ongoing developments.
An LLM-driven semantic methodology maps complex logical dependencies between prediction markets, revealing $40M in extractable value and systemic inefficiency.
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