Flashloan Arbitrage Combo
What’s a flash loan, and how do you do a flash loan arbitrage with no coding?
Last updated
What’s a flash loan, and how do you do a flash loan arbitrage with no coding?
Last updated
Flash Loans are introduced by the Aave, an open-source lending protocol for anyone to deposit and borrow cryptographic assets. Essentially, flashloans let users borrow any amount up to the total liquidity available without any collateral, so long as the loan is repaid in the same transaction. If the loan is not repaid, the whole transaction will be reverted. With flashloan anyone can access a massive amount of liquidity, and use the loan with other protocols however they want. You can become a ‘whale’ without any capital.
At the time of writing, there are three pools providing flashloans:
Aave: 22 tokens available with 0.09% fee
dYdX: 3 tokens available zero fee *
Uniswap V2: 100+ tokens available with 0.3% fee
So, flashloan sounds like a very good deal. What exactly can you use it for? Marc Zeller from Aave has written a very nice piece demonstrating some of the top use cases for flashloan.
We summarize the use cases:
Arbitrage trades
Collateral swap
Self-hedging
Self-liquidation
(Debt) Interest rate swap
(Debt) Currency swap
The most popular use case by far is Arbitrage trades. For those unfamiliar, arbitrage is the strategy of making a profit from price differences between different markets. To make a significant amount of profit, you will need substantial capital to get started. And this, is where the magic happens — We use flashloan to generate free money with no upfront cost.
There are some important things to understand:
For arbitrage traders, Furucombo lowers the barriers-to-entry for building money legos, providing all the necessary elements to create arbitrage strategies including the so far coder-only flashloans. But, please keep in mind that Furucombo does NOT find arbitrage opportunities for you. You will have to find it yourself. ✊🏻
Enough with the disclaimer, let’s get to the checklist. 👇🏻
The example we use in the following is an arbitrage opportunity found between KyberSwap and Uniswap V1 a few months ago.
Now you found the rate difference, let’s start creating the combo. The complete combo should look like this:
💡 Tips: If your input is according to the previous cube's output, enter a slightly lower amount instead of the exact amount. This way, you can avoid combo failure due to rate difference.
This is simply adjusting the execution order. You want to borrow from flashloan at the very beginning to have the upfront capital. So, just click and drag the borrow cube to the top and keep the payback cube at the bottom.
The final combo would look like...
🎉 Bravo! You’ve made money with zero capital. Don’t forget to share your result on Twitter. 🎉
