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<p>Price formation across multiple markets is often implemented through carry trades that move value along sequences of exchanges. In decentralized markets built from constant product market maker (CPMM) pools, cyclic transactions form a natural class of carry trades that exploit price misalignment across a network of CPMMs. This paper develops an efficient evaluation method that provides tight, easily computable bounds on the profitability of such cyclic arbitrage opportunities, enabling rapid investment sizing across large collections of candidate cycles.</p>

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Efficient evaluation of cyclic arbitrage in constant product market makers

  • 期刊论文

  • 发表日期：

    2026年3月12日

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  • Alan King,
  • Bohang Wei,
  • Chris Williams,
  • Nitin Gaur,
  • Keith Houck,
  • Ryo Kawahara,
  • Mikio Takeuchi,
  • Aliza Heching

摘要

Price formation across multiple markets is often implemented through carry trades that move value along sequences of exchanges. In decentralized markets built from constant product market maker (CPMM) pools, cyclic transactions form a natural class of carry trades that exploit price misalignment across a network of CPMMs. This paper develops an efficient evaluation method that provides tight, easily computable bounds on the profitability of such cyclic arbitrage opportunities, enabling rapid investment sizing across large collections of candidate cycles.