Arbitrage Revenue

Arbitrage revenue is the profit earned by traders who exploit price discrepancies for the same asset across different exchanges or pools. This is a standard and necessary function of efficient markets, as it helps to align prices globally.

In the context of blockchain, arbitrageurs often use automated bots to detect and execute these trades. While this is generally seen as a positive activity, it is often inextricably linked to MEV.

Arbitrageurs contribute to market efficiency, but their activities can also lead to sandwich attacks if not managed correctly. Understanding the distinction between beneficial arbitrage and predatory MEV is important for market participants.

It is a key element of the behavioral game theory that defines decentralized trading. The pursuit of arbitrage revenue is a primary driver of liquidity and price discovery.