Most arbitrage fashions in the present day? Inefficient. Gradual. Computationally costly.
“Conventional arbitrage strategies counting on convex optimization wrestle in AMM-driven markets as a result of they assume clean constraints that not often exist in apply. As detailed within the paper, convex formulations, whereas efficient for canonical xy=ok curves, fall quick when utilized to concentrated liquidity AMMs.
In these settings, the optimization drawback entails piecewise-linear constraints, the place options incessantly lie on the boundary of the possible area. This mismatch forces solvers into convergence challenges, as gradient-based strategies fail close to abrupt transitions and simplex strategies leap between vertices. The result’s a system that, regardless of its mathematical magnificence, is gradual, unpredictable, and ill-suited for real-time arbitrage the place each millisecond counts.”
— Dr. Mark Richardson, Bancor Mission Lead
