Furucombo arbing brain dump

Here’s a brain dump of my tips and strategies when flash arb’ing on Furucombo. I don’t claim to be an expert at this so read it with a pinch of salt.

My arb combo is failing… why?

A flash arb combo might be failing for a myriad of reasons e.g.

  • Prices have changed — arb opportunities generally come and go within minutes. And if the price changes for the worse, it would make your arb unprofitable to the point where you are unable to repay the flash loan at the end of the combo, which reverts the transaction and results in the common error messages you see in the UI (e.g. “something’s wrong inside the flashloan”, “error in 5th block”, “your tx was rejected”).
  • Integration issues — every now and again there might be a price feed issue from one of the protocols. Furucombo admins should be able to tell if this is the case in Discord but not much can be done from their side other than to notify the protocol for resolution.
  • You were frontrunned by a bot — e.g. as soon as you submitted your combo a front running bot copied your Tx, simulated it in their local ganache fork to evaluate profitability and if worthwhile, executed it on the mainnet with a higher gas price within seconds and essentially stole your arb. This isn’t really a furucombo specific issue as it’s quite prevalent across the ethereum landscape. There are defense mechanisms like commit/reveal, submarine sends…etc to guard against frontrunning but they add complexity to the transaction which kills the arb.

So how do I maximise my chances of success?

Different strategies work for different types of arbitrageurs. As a general rule of thumb:

  • You should leave some breathing room in between the combo blocks to mitigate minor price movements. e.g. an output of 1.001457 renBTC on one combo block should not be exactly 1.001457 as input on the next block because if the price moves by a fraction of a percent it will result in an error. I tend to leave about 0.3% breathing room in between blocks depending on how the trading pair is trending.
  • Sudden market downturns and upturns are a great time to look for arbs as different DEXs use different sources and approaches for pricing feeds. This would then result in price discrepancies.
  • Always select the fastest gas option to execute combos — if it’s too expensive and makes your arb unprofitable then it’s not really a profitable arb to begin with. If you go with anything less than fastest you’re essentially taking a coffee break in a 5 meter sprint.
  • Flash loans in general are fairly gas intensive actions. There were times in early Sep where I found more arb ops through supplying the up front capital myself since I didn’t need to pay the flash fee and flash sized gas, not to mention so many people were focused on hitting a zero capital flash arb back then.
  • There were also occasions where a flash arb was net profitable but needed me to supply a portion of the initial capital. This is perfectly fine as long as you’re making a net profit at the end of the whole Tx including gas. Just because you see the ‘Initial Funds’ section on the UI doesn’t necessarily mean it’s not profitable. I tend to keep some stablecoins (DAI, USDC…etc) on hand for this purpose.

How do you find arb opportunities?

If you want to see example combos which have worked for others then a simple approach would be to:
1. Monitor the Furucomb Proxy Contract where all combos are executed from
2. Click into any of the ‘confirmed’ transactions (ignore pending or failed)
3. Copy the Transaction Hash and paste into the Decombo tool
4. If the decombo’ed view looks like a profitable arbitrage combo (i.e. the left hand side says ‘You will receive…’, then note it down and try the same combo again in a few days to see if it became profitable again.

Should I just flash loan a gazillion ETH?

Increasing the flash loan size for an arb combo might seem like a way to maximise profit but:

  • Also the bigger the amount being traded the bigger the slippage risks across DEXs.

How quickly can I start making big money?

Slow down. The tips above merely help you step into the competitive arb’ing arena itself, which is generally ok if you’re only looking to hit small arb profits here and there by chance.

Tech stuff.

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