Flash Loan Arbitrage Bot

This is an exploratory project designed to test different approaches to arbitrage using flash loans.

The current version includes a FlashLoanArbitrage contract that obtains a flash loan from Balancer V2 and performs an ERC20 token swap using two Uniswap V2 forks: Uniswap V2 and SushiSwap V2.

The contract exposes a method called checkArbitrageProfitability, which is used by the bot to determine whether an arbitrage opportunity is profitable. If it is, the bot calls executeArbitrage to execute the trade using the borrowed ERC20 token. The contract initiates the loan, swaps tokens across both DEXes, repays the flash loan, and retains any profit.

Testing

For simplicity, the bot and the contract have been tested using Anvil and an Ethereum mainnet fork. During testing, the DEX reserves were manually modified to simulate a profitable arbitrage scenario.

Useful commands

Run the following commands in ./smart-contracts:

Import foundry wallet. This wallet will be used for the bot too:

  cast wallet import NAME --interactive

Copy and complete the following .env file

  cp .env.example .env

Install dependencies:

  make install

Test with mainnet fork:

  make test

Run anvil with mainnet fork:

  make anvil-fork

Change reserves. This requires a few previous commands mentioned in the Makefile

  make change-reserves

Deploys:

  make deploy-anvil
  make deploy-sepolia
  make deploy-mainnet

Run the following commands in ./bot:

Install dependencies:

  pnpm install

Generate ABI:

  pnpm update-abi

Start bot:

  pnpm start