Crypto Flexs
  • DIRECTORY
  • CRYPTO
    • ETHEREUM
    • BITCOIN
    • ALTCOIN
  • BLOCKCHAIN
  • EXCHANGE
  • TRADING
  • SUBMIT
Crypto Flexs
  • DIRECTORY
  • CRYPTO
    • ETHEREUM
    • BITCOIN
    • ALTCOIN
  • BLOCKCHAIN
  • EXCHANGE
  • TRADING
  • SUBMIT
Crypto Flexs
Home»ADOPTION NEWS»Impact of Trade Order Policy on Ethereum Arbitrage Strategies
ADOPTION NEWS

Impact of Trade Order Policy on Ethereum Arbitrage Strategies

By Crypto FlexsNovember 3, 20242 Mins Read
Facebook Twitter Pinterest LinkedIn Tumblr Email
Impact of Trade Order Policy on Ethereum Arbitrage Strategies
Share
Facebook Twitter LinkedIn Pinterest Email

james ding
November 1, 2024 08:28

The study investigates how trade order policies affect arbitrage profitability in Ethereum Layer 2 solutions, highlighting the effectiveness of time advantage strategies.





Recently exploring layer 2 solutions on Ethereum, researchers investigated how different trade order policies affect arbitrage opportunities. The study, authored by academics including Akaki Mamageishvili, Offchain Labs’ Ed Felten and others, examined the potential profitability of arbitrage strategies when time advantages are auctioned for inclusion of transactions in layer 2 networks, according to Offchain Labs.

Research Methodology

This study outlines three scenarios to evaluate the impact of trading order policies on arbitrage.

  1. First come first serve (FCFS): This method involves capturing arbitrage opportunities as they arise, without any premium for including faster trades. Participants invest in latency infrastructure to speed up transaction sequences.
  2. Gas Priority Auction (PGA): Here, transactions are prioritized based on the monetary tip provided to the block builder, incentivizing traders to pay more for processing initial transactions within a block.
  3. FCFS with time advantage: In this scenario, users bid on priority trade orders using dynamic programming to optimize when trades are executed for maximum profit.

Researchers conducted simulations to determine the potential profits under these market conditions.

Research Results

Studies have shown that the choice of trading order policy has a significant impact on arbitrage profits. FCFS using the Time Advantage method has been shown to be the most profitable approach, especially on highly volatile trading pairs such as ETH-USDT. Simulation results show that this strategy generates 47.7% more revenue than PGA and 86.77% more than traditional FCFS.

Implications for MEV extraction

This study further highlights implications for maximum extractable value (MEV) operations. The design of the trading sequence mechanism affects profit distribution, and time-advantaged arbitrageurs are advised to delay trades within the time window to maximize profits. Additionally, Automated Market Maker (AMM) pools can potentially reclaim MEV by adjusting fees and limiting trading frequency for arbitrageurs.

The paper also points out that although the negative autocorrelation of price movements may favor an immediate FCFS strategy, overall, FCFS with its time advantage is more profitable than PGA, especially in volatile market conditions.

These results provide important insights for traders and developers in optimizing trading order policies to improve arbitrage profitability on Ethereum’s layer 2 network.

Image source: Shutterstock


Share. Facebook Twitter Pinterest LinkedIn Tumblr Email

Related Posts

Crypto Exchange Rollish is expanded to 20 by NY approved.

October 2, 2025

SOL Leverage Longs Jump Ship, is it $ 200 next?

September 24, 2025

Bitcoin Treasury Firm Strive adds an industry veterans and starts a new $ 950 million capital initiative.

September 16, 2025
Add A Comment

Comments are closed.

Recent Posts

Tria Raises $12M To Be The Leading Self-custodial Neobank And Payments Infrastructure For Humans And AI.

October 14, 2025

How to Use Google Gemini to Analyze Crypto Coins Before Investing

October 14, 2025

Class action lawsuit claims Microsoft choked AI supply to drive up ChatGPT costs

October 14, 2025

CME Group Launches CFTC Regulated Solana and XRP Options

October 13, 2025

Eightco Holdings Inc. ($ORBS) Makes Strategic Investment Into Mythical Games To Accelerate Human Verification And Digital Identity In Gaming

October 13, 2025

Jiuzi Holdings, Inc. (JZXN) Secures 100 Bitcoin Via Private Placement, Signaling New Phase In Crypto Treasury Deployment

October 13, 2025

Collaboration Across Bybit, DigiFT And UBS UMINT Expands Collateral Solution For Institutions

October 13, 2025

BitMine Immersion (BMNR) Announces ETH Holdings Exceeding 3.03 Million Tokens And Total Crypto And Cash Holdings Of $12.9 Billion

October 13, 2025

Phemex Announces Halloween Futures Trading Festival With 200,000 USDT Prize Pool

October 13, 2025

ViaBTC Unveils Enhanced Collateralized Loan Service For Global Miners

October 13, 2025

Tapbit secures strong presence at TOKEN2049 in Singapore

October 13, 2025

Crypto Flexs is a Professional Cryptocurrency News Platform. Here we will provide you only interesting content, which you will like very much. We’re dedicated to providing you the best of Cryptocurrency. We hope you enjoy our Cryptocurrency News as much as we enjoy offering them to you.

Contact Us : Partner(@)Cryptoflexs.com

Top Insights

Tria Raises $12M To Be The Leading Self-custodial Neobank And Payments Infrastructure For Humans And AI.

October 14, 2025

How to Use Google Gemini to Analyze Crypto Coins Before Investing

October 14, 2025

Class action lawsuit claims Microsoft choked AI supply to drive up ChatGPT costs

October 14, 2025
Most Popular

HKbitEX obtains provisional approval for Hong Kong virtual asset trading platform license

March 29, 2024

HKMA fines Hong Kong’s WeChat Pay for AML failures

September 1, 2024

Improved data processing with NVIDIA KVIKIO for remote IO

March 1, 2025
  • Home
  • About Us
  • Contact Us
  • Disclaimer
  • Privacy Policy
  • Terms and Conditions
© 2025 Crypto Flexs

Type above and press Enter to search. Press Esc to cancel.