Arbitrage

About this model

This diagram simulates a cryptocurrency arbitrage system focusing on maximizing profits by leveraging price differences of Bitcoin ($BTC) across two exchanges, Gemini and Kraken. Initially, the system allocates USD to purchase $BTC at the lower of the two exchange prices, a decision influenced by dynamic registers calculating the "Best Buy Price" based on real-time data from both exchanges. Once $BTC is acquired, it's subsequently sold at the higher price offered between the two markets, as determined by another register calculating the "Best Sell Price." The flow includes automatic conversions and transactions, indicated by resource and state connections feeding into various pools designed to track the stages of the arbitrage: allocation of funds, buying $BTC, selling $BTC, and finally calculating the profit from these transactions. The automatic nature of these transactions suggests a system designed to execute trades quickly to exploit temporary discrepancies in $BTC pricing across different markets, thereby generating profits. The inclusion of pools labeled "Profit" and "Total Profit" alongside drains and state connections set to trigger further actions based on profit levels emphasizes the goal of continuously assessing and maximizing arbitrage opportunities.

“Arbitrage” is a diagram in the Machinations Community by Nicolás Alejandro Munafó.

You can open the original diagram in the Machinations app, press Play to watch how resources move through it, and change its values to see how the system responds. Machinations is a visual tool for designing, simulating and balancing game economies and other systems, where resources flow through sources, pools, drains, converters and gates.