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Glossary Term

Arbitrage

Arbitrage is a trading strategy that exploits price differences for the same asset across different markets or exchanges—on Solana, arbitrageurs rapidly buy and sell crypto assets (often using bots or aggregators) across DEXs and CEXs to lock in risk-free profits. This strategy increases market efficiency and liquidity but is highly competitive and requires fast execution.

Beginner
Trading
Crypto Terminology

Arbitrage: what is it?

Examples

  • 1

    Using bots to simultaneously buy SOL on Raydium at a lower price and sell on Orca at a premium.

  • 2

    Conducting triangular arbitrage between USDC, SOL, and SRM across different platforms.

Common Use Cases

High-frequency trading for whales, funds, and algorithmic bot operators.
Running arbitrage bots as a revenue strategy using open API data and deep liquidity pools.
Tightening DEX spreads, reducing slippage for regular users and traders.
Cross-market data analysis for research, price discovery, and strategic rebalancing.

Pro Tips

💡

Incorporate transaction fees, gas, and slippage into arbitrage planning—they can quickly erase thin profit margins.

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Utilize real-time data feeds and the fastest APIs or aggregators (like Jupiter) for best success in Solana arbitrage.

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Be aware of smart contract risks, network congestion, and sudden liquidity changes when conducting automated strategies.

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Keep up with the evolving Solana ecosystem—new DEXs or trading pairs present fresh arbitrage windows.

Frequently Asked Questions

Related Terms

Paper Hands
Rug Pull
Bagholder
ATH (All-Time High)
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