Who Are Arb Bots ?

Trader Arb Bots compare the exchange rates on THORChain with the rates on external markets. If they find the price is lower on THORChain they can buy there and sell on an external market. If they find the price is lower on external markets they can buy there and sell on THORChain. This process is repeated at high-frequency. Over time, price information propagates and THORChain settles with external markets.

Prices on THORChain are maintained by profit-seeking traders. Traders find assets that are mispriced between markets. They buy assets on markets with low prices and sell them on markets with high prices. This earns them a profit.

Methodology Part 1:

1- Detecting Arb bots: First, I have extracted the Ethereum addresses from Thorchain Swap table by filtering the wallets which their address begins with 0x. then, I have sorted these users by total number of transactions made by them, since they are bots, so the number of transactions made by them must be enough high (I have considered more than 50 transactions).

then, I have calculated the average time between these users transactions. the arb bots should have less than 1 day average time difference between their first and last transactions.

Moreover, I have searched around the web to realize the first date of using arb bots on THORChain, I have found this article as the very first results about ThorChain arbs, So, I have filtered timespan for bots transactions after April 2020.

So, By doing above things, I have extracted the bots from THORChain swap table as below:

Methodology Part 2:

after detecting bots, I have analysed the behavior of these bots for assets and pools on THORChain (total and over-time data) to realize what pools are they interacting with and which what tokens.

Also, I have calculated the number and volume of transactions on Synthetic and Non-Synthetics assets to realize which one is most popular for arb bots.

And after that, I have calculated the profit earned by these bots by using Thorchain and Ethereum tables.

Based on the left above chart, we can see most number of Arbs transactions have performed in BNB.BUSD pool with about 29% of total transactions, after that we have ETH.ETH pool as the second popular one.

in terms of volume, we can see ETH.ETH is on the first rank for Arb bots and BNB.BUSD is second one here .

the 3rd popular pool in both terms is ETH.USDC.

In terms of assets swapping from, we can see RUNE is by far the most popular asset for arb bots to swap from. after that we have ETH on the second rank on both charts.

In terms of assets that arb bots are swapping to, we can also see RUNE on the first rank. unlike the swap from charts, we can see BNB.BUSD as the most popular asset to swap to, on the 2nd rank after RUNE.

On the above charts, we can see average volume of Arb transactions on each pool and asset (swapping from and swapping to).

in terms of assets, we can see RUNE has by far the most average volume transaction for Arb bots.

in terms of pools, we can see BTC.BTC has the most average volume for arb bots. after that we can see a close compete between ETH.ETH and ETH.USDC and TERRA.LUNA and TERRA.UST.

totally, we can say that BTC and ETH has the most average volume among others because Luna and UST have crashed during may…

Now in terms of over-time data, we can see most number of arb transactions have achieved during the year 2021 especially during June and July with the highes spikes.

Also we can see the pools and assets (Swapping from and swapping to) that the arb bots have interacted with over time.

we can see smaller bars on the chart during the year 2022. we can conclude that users tend to use less from their arb bots on bearish market.

In terms of volume, unlike previous chart, we can see the highest volume of arb bot transactions have achieved after Nov 2021. we can see highest spike during Nov and December when the market was almost bullish. after that, we can see a significant decreasing trend till March 2022, but again after that and especially during April, we can again see some high spikes on volume of transactions made by arb bots on thorchain swaps.

Also, the pools and the assets that arb bots have interacted with them, over time, is visible on the bars.

And on the above chart, we can see the growth rate of pools that ETH.ETH has by far the most sharp slope among other pools over time on thorchain.

As we see, most volume and also number of Arb bot transactions by far belong to Non-Synth assets and Synthetic assets have a very low share in both terms.

And at last, on the left chart, we can see the profit made by arb bots on ETH and THOR. as we see, the ETH profit is more than THORChain.

What are synthetics?

native assets (such as BUSD), is identified on the blockchain as BNB.BUSD. but, The equivalent synthetic asset is identified as BNB/BUSD (separated by /).

for another example: ETH/THOR-0XA5F2211B9B8170F694421F2046281775E8468044 is synthetic Asset of ETH.THOR

So, considering above fact, I am going to analyse data as below:

Conclusion:

based on the above analysis, we have realized that:

• there are not so many Arb bots on ThorChain (in my definitions that I have explained at the start of the bounty).

• ETH.ETH is the most popular pool for arb bots in terms of volume of transactions

• BNB.BUSD is the most popular pool for arb bots in terms of number of transactions.

• RUNE is the most popular token for swapping from and swapping to, by arb bots.

• RUNE has the most average volume among other assets swapped by arb bots.

• BTC.BTC and ETH.ETH pools have the most average volume among other pools for arb bots.

• most volume of arb bots swaps have performed on non-synth assets.

• the number of arb bots transactions is decreasing over time especially during the year 2022 but their transaction volume is slightly increasing over time.

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