DEX-Arbitrage

A minimal, read-only Python project that simulates DEX arbitrage opportunities using real on-chain state. This tool provides theoretical profit calculations only—no transaction execution, signing, or MEV.

Features

• ✅ Connects to public RPC endpoints (Arbitrum by default)
• ✅ Reads pool reserves via getReserves() from Uniswap V2-style AMMs
• ✅ Implements constant-product swap math with configurable fees
• ✅ Simulates A → B arbitrage between two DEX pools
• ✅ Sweeps input sizes to find optimal trade size
• ✅ Clear console output with profit calculations
• ✅ Block number logging
• ✅ Gas breakeven placeholder
• ✅ Optional CSV output

Requirements

• Python 3.10 or higher
• Libraries: web3, eth-abi, numpy

Installation

1. Clone the repository:

git clone https://github.com/fbl-vol/DEX-Arbitrage.git
cd DEX-Arbitrage

2. Install dependencies:

pip install -r requirements.txt

Quick Start

Try the demo mode first (no RPC connection needed):

python simulate.py --demo

Usage

Run the simulation script with real on-chain data:

python simulate.py

The script will:

1. Connect to the configured RPC endpoint
2. Read current reserves from two DEX pools
3. Simulate arbitrage opportunities across a range of input amounts
4. Display the optimal trade size and expected profit

Configuration

All configuration is done in the simulate.py file at the top in the CONFIGURATION SECTION:

# RPC endpoint
RPC_URL = "https://arb1.arbitrum.io/rpc"

# Pool addresses (modify with your target pools)
POOL_1_ADDRESS = "0x905dfCD5649217c42684f23958568e533C711Aa3"
POOL_2_ADDRESS = "0x8e295789c9465487074a65b1ae9Ce0351172393f"

# Token configuration
TOKEN_A_ADDRESS = "0x82aF49447D8a07e3bd95BD0d56f35241523fBab1"  # WETH
TOKEN_B_ADDRESS = "0xaf88d065e77c8cC2239327C5EDb3A432268e5831"  # USDC
TOKEN_A_DECIMALS = 18
TOKEN_B_DECIMALS = 6

# Fee tier (in basis points)
FEE_BPS = 30  # 0.3%

# Sweep parameters
MIN_INPUT_AMOUNT = 0.01
MAX_INPUT_AMOUNT = 10.0
SWEEP_STEPS = 100

Finding Pool Addresses

To find Uniswap V2-style pools on Arbitrum with the same token pair:

Option 1: Use DEX Analytics Sites

• Sushiswap Analytics - Find Sushiswap V2 pools
• DexScreener - Search across multiple DEXes
• Look for pairs with same tokens (e.g., WETH/USDC) on different platforms

Option 2: On-Chain Exploration

• Use factory contracts to find pair addresses:
  • Sushiswap Factory: 0xc35DADB65012eC5796536bD9864eD8773aBc74C4
  • Call getPair(token0, token1) to get pool address
• Verify the pool has getReserves() method (Uniswap V2 interface)

Common V2-style DEXes on Arbitrum:

• Sushiswap (V2 pools)
• Camelot (V2-style)
• Solidly forks

Important Notes:

• Both pools must have the same token pair (e.g., WETH/USDC.e)
• Both pools must implement the Uniswap V2 interface (getReserves(), token0(), token1())
• For real arbitrage, use pools from different DEXes (price differences unlikely on same DEX)
• Arbitrum has two USDC tokens:
  • USDC.e (bridged): 0xFF970A61A04b1cA14834A43f5dE4533eBDDB5CC8 - Most V2 liquidity
  • USDC (native): 0xaf88d065e77c8cC2239327C5EDb3A432268e5831 - Newer, less V2 liquidity
  • The default config uses USDC.e as it has more V2 pool options

Modifying Pair Addresses

To analyze different token pairs:

1. Update POOL_1_ADDRESS and POOL_2_ADDRESS with your target pools
2. Update TOKEN_A_ADDRESS and TOKEN_B_ADDRESS with the token addresses
3. Update TOKEN_A_DECIMALS and TOKEN_B_DECIMALS accordingly
4. Verify both pools support getReserves() by testing in demo mode first

Optional Features

Enable CSV output by setting:

ENABLE_CSV_OUTPUT = True

Adjust gas cost estimation:

GAS_COST_ETH = 0.001  # Estimated gas cost in ETH

Output Example

======================================================================
DEX ARBITRAGE SIMULATION RESULTS
======================================================================

Block Number: 12345678

--- Pool Reserves Snapshot ---
Pool 1:
  Token A Reserve: 1,234.56
  Token B Reserve: 2,345,678.90

Pool 2:
  Token A Reserve: 1,240.00
  Token B Reserve: 2,350,000.00

--- Optimal Arbitrage Opportunity ---
Direction: Pool2→Pool1
Optimal Input Amount (Token A): 5.2500
Gross Profit (Token A): 0.012345
Net Profit (after gas, Token A): 0.011345
Profit Percentage: 0.24%

✅ Profitable arbitrage opportunity detected!

--- Configuration ---
Fee (basis points): 30 (0.3%)
Gas Cost Estimate: 0.001 ETH

======================================================================

Scope & Limitations

What This Does

• ✅ Read-only simulation of arbitrage opportunities
• ✅ Uniswap V2-style AMMs only
• ✅ Single chain analysis (Arbitrum by default)
• ✅ Two DEX pools, one token pair
• ✅ Theoretical profit calculations

What This Does NOT Do

• ❌ No transaction execution
• ❌ No flashloans
• ❌ No mempool access
• ❌ No subgraph queries
• ❌ No private RPCs required
• ❌ No signing or wallet integration
• ❌ No MEV integration

Acceptance Criteria

• ✅ Script runs without errors on valid pool addresses
• ✅ Output changes when reserves change (test with different blocks)
• ✅ Profit calculations disappear when fees are set to zero (as expected with constant product)
• ✅ No on-chain state mutations (read-only operations)
• ✅ Easy to modify pair addresses via configuration section

Technical Details

Constant Product Formula

The script uses the Uniswap V2 constant product formula with fees:

amountOut = (amountIn * (10000 - fee) * reserveOut) / (reserveIn * 10000 + amountIn * (10000 - fee))

Where fee is in basis points (e.g., 30 = 0.3%).

Arbitrage Strategy

The simulation performs bidirectional arbitrage detection:

1. Direction 1: Pool1 (Token A → Token B) then Pool2 (Token B → Token A)
2. Direction 2: Pool2 (Token A → Token B) then Pool1 (Token B → Token A)
3. The script automatically selects the more profitable direction
4. Calculate profit: Final Token A - Initial Token A

The script sweeps through multiple input amounts to find the optimal trade size that maximizes profit for the chosen direction.

Extending for Execution

This codebase is designed to be easily extended for actual trade execution:

• Add wallet/account management
• Add transaction building and signing
• Add gas price optimization
• Add slippage protection
• Add flashloan integration
• Add mempool monitoring

License

MIT

Contributing

This is a minimal proof-of-concept. Contributions are welcome for:

• Additional DEX support (Uniswap V3, Curve, etc.)
• Multi-hop arbitrage
• Better optimization algorithms
• Real-time monitoring
• Additional chain support

Disclaimer

This tool is for educational and research purposes only. Arbitrage trading involves significant risk. Always test thoroughly before executing real trades. No warranty is provided.