Sudoswap Providing Liquidity For NFT Arbitrage
While this isn’t quite new, an NFT trader known as Lorem recorded their approach to arbitraging NFTs on October 20 and how it has become a crowded trade.
They also discussed the difficulties of combating sandwich assaults in order to carry out these sorts of exchanges. In total, this trader made 7 ETH ($9,000) in just over a month, demonstrating the potential of this new sort of arbitrage – one that may rise in the future as more financial instruments for NFTs become available.
Lorem said in a blog post:
“The overall strategy for this arbitrage is to find NFTs on other marketplaces that can be bought for less than what the sell price is listed as on Sudoswap, and immediately sell the NFT into a Sudoswap pool.”
Arbitrage occurs when a trader purchases an item on one marketplace and sells it at a higher price on another, taking advantage of a price difference between the two markets. This is often done for highly liquid assets, such as equities or cryptocurrency, where the deals may be completed concurrently.
The issue with NFTs is that markets are illiquid. NFTs might take many days or weeks to sell. This implies that an arbitrageur may know they can purchase the NFT cheaply on one platform and sell it on another where sales are normally greater, but they have no idea if the token will really sell. As a result, it is a dangerous transaction.
Sudoswap alters this by giving instant liquidity. It functions more like an exchange, with pools of NFTs available for purchase. The NFTs are priced on a bonding curve (similar to Uniswap); with the more NFTs purchased, the higher the price of the NFTs. This implies that traders can immediately sell their NFTs at the current market price.
DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
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CoinCu News
Grand Cayman, Cayman Islands, 22nd November 2024, Chainwire
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