Sudoswap’s Instant Liquidity Eases Arbitrage Between NFT Marketplaces

Additionally, they highlighted the difficulties in defending against sandwich attacks when engaging in these transactions. This trader made 7 ETH ($9,000) in total in a little over a month, demonstrating the potential of this novel kind of arbitrage, which may develop further when additional financial instruments emerge for NFTs.

Instant Liquidity for NFT Arbitrage

By taking advantage of a price difference between two markets, a trader can earn profit from arbitrage by purchasing an asset on one platform and selling it on another for a higher price.

The difficulty with NFTs is that the markets are unprofitable. NFT sales might take days or weeks. Therefore, an arbitrageur may be aware that they may purchase the NFT for a low price on one marketplace and then offer it for sale on another platform where sales are higher, but they are uncertain as to whether the token will be sold.

Sudoswap alters this by offering instant liquidity. The way it operates is more similar to an exchange, with pools of NFTs available for purchase.

Flashbots to Prevent Sandwich Attacks

Lorem discovered that while the tactic was effective, he immediately ran into issues with sandwich attacks, in which an MEV bot observes a profitable transaction as it is published to the network and then employs ingenious methods to capture the transaction for itself. The early amounts were extremely minimal, which startled Lorem.

Lorem employed Flashbots, an expensive but successful tool that enables customers to have transactions inserted into blocks in a significant manner, to address this issue. In one instance, Lorem used this service for a cost of 0.3 ETH ($390), with the money going to the validator who completes the transaction. This resulted in a gain of 2.7 ETH ($3,480).