I am trying to research flash loans, with the idea to attempt a personal project to complete a successful flash loan using arbitrage. Does this sound reasonably possible? Great to get advice.
Some initial thoughts:
1. Dont seem to be much on flash loans when I net search, which is maybe red flag…
2. Arb opportunites would presumably need a bot, but are the bots available to retail investors going to be any good (or would they be too slow)?
3. The adv of using a flash loan would seem to be that if the arb opportunity has passed when the loan executes, and therefore the loan fails, my loss is limited to gas fees rather than any losses due to a bad trade
4. Are flash loans mainly used for liquidations?
5. To profit I would need to execute enough successful trades to buy out the bad trades where gas fees are lost when the flash loan does not execute.
5 thoughts on “Flash Loan Arbitrage – are there genuine opportunities out there?”
Before you read my word vomit, please note that all the YouTube videos and online tutorials of flash loan bots are SCAMS if they want you to just deploy the contract and give it starting money. They have fake import statements that look legit at a glance but if you actually look, it hardcodes the address (like “pancake swap manager” (what even is a manager for pancake swap lol)) to be their wallet and they just steal your funds
If you’d like, you can checkout [my GitHub repository here ](https://github.com/liamgoss/Polygon-Arbitrage-Bot)where I used NodeJS & Solidity to do automated flash loan arbitrage trades on Polygon.
I haven’t gotten a successful trade using that bot in production (in local testing like with hard hat fork of the blockchain, etc. I have)
I believe that the root of the issue is…well the whole basis of my bot. I don’t think it follows the whole xy=k function very well.
That code was adapted from the DappUniversity masterclass (costs $$$, not worth it) and to be honest it was bare bones to start with. I’d like to think I made it much better (but, again, it doesn’t work so probably not)
My goal for that bot was to do flash loan arbitrage with AAVE on the Polygon blockchain with having little to no starting money (only enough to cover gas fees, so just pocket change at the time).
Your 3rd point is correct, and as for your first point I believe it’s because: not only are flashloans defi-only (which scares most people, I’d wager that most people prefer to just use coin base or something that “just works”) but also it’s a feature mainly designed for developers. If you can’t write a smart contract, you can’t use it to its fullest potential-if at all
There are tons of bots that are earning on arbitrage using flashloans. While it’s not as competitive is in TradFi and there might be some entry strategies, I wouldn’t say that it’s undeveloped in any regard.
The problem with these types of questions is ppl who made it profitable will likely not admit it to minimize competition
Can it be done? Yes. But if you ask this, most likely you won’t
Unfortunately that’s a really hard mission to make money with flash Ioans