Arbitrage in Crypto World 101

Crypto arbitrage is the practice of buying an asset on one venue at a lower price and simultaneously selling it on another venue at a higher price, capturing the spread. The trade is risk-controlled because both legs execute within seconds. In crypto, arbitrage exists between centralised exchanges, between DEX pools on the same chain, and between chains via bridges.

A DEX-to-DEX arbitrageur monitors prices of the same token across automated market makers — for example, ETH-USDC on Uniswap v3 versus SushiSwap. When the gap exceeds gas and slippage costs, a smart contract atomically buys from the cheaper pool and sells into the richer pool in a single transaction, often using a flash loan so the trade requires no upfront capital.

For repeatable profit, yes. Manual arbitrage was viable in 2017-2020 when gaps were wider and competition was lighter. In 2026 most opportunities close in milliseconds, so profitable arbitrage requires automation: a price-feed monitor, a transaction builder, and access to private mempools such as Flashbots or MEV-Share to avoid being front-run by other searchers.

Execution risk from slippage and partial fills, MEV competition (your transaction gets sandwiched or front-run), capital lockup across exchanges, smart contract risk on the DEXes used, and gas burn on failed transactions. Centralised exchange arbitrage adds counterparty risk: deposits and withdrawals can be paused, freezing one leg of the trade and leaving you with directional exposure.

Onchain arbitrage with flash loans needs near-zero capital but significant engineering expertise — the loan amount is borrowed and repaid within one transaction. Without flash loans, expect to need $10k+ to absorb gas and capture meaningful absolute profit per trade. Centralised-exchange arbitrage typically requires balances pre-positioned on every venue you trade between.