Creating a flash loan arbitrage bot involves using smart contracts on blockchain platforms like Ethereum to borrow and repay loans within a single transaction. The process begins with identifying price discrepancies across decentralized exchanges (DEXs). The bot borrows funds through a flash loan, buys assets at a lower price on one DEX, and sells them at a higher price on another. All this must happen in one transaction to avoid any risk, as the loan is automatically repaid if the arbitrage is successful.
To build the flash loan arbitrage bot, you'll need coding skills in Solidity, the programming language for Ethereum smart contracts. Start by writing a smart contract that interacts with flash loan providers like Aave or dYdX. Integrate the contract with a DEX aggregator to find the best prices. Finally, deploy the smart contract and test it thoroughly on a testnet before using it on the mainnet.
