Arbitrage traders are an essential component of the Uniswap ecosystem. These are traders that specialize in finding price discrepancies across multiple exchanges and use them to secure a profit. For example, if bitcoin was trading on Exchange 1 for $35,500 and Exchange 2 at $35,450, you could buy bitcoin on Exchange 2 and sell it on Kraken to secure an easy profit. If done with large volumes it’s possible to bank a considerable profit with relatively low risk.
What arbitrage traders do on Uniswap is find tokens that are trading above or below their average market price – because of large trades creating imbalances in the pool and lowering or raising the price – and buy or sell them accordingly. They do this until the price of the token re-balances in line with the price on other exchanges and there is no more profit to be made. This harmonious relationship between the automated market maker system and arbitrage traders is what keeps Uniswap token prices in line with the rest of the market.
Professional at CIC keep a close eyes on the market and are determined to give our viewers and members the insight of the market using our analysis and thus assisting our members to score well on the crypto charts.