Creating a flash loan arbitrage bot involves using smart contracts on blockchain platforms like Ethereum to borrow and repay loans within a single transaction. The process begins with identifying price discrepancies across decentralized exchanges (DEXs). The bot borrows funds through a flash loan, buys assets at a lower price on one DEX, and sells them at a higher price on another. All this must happen in one transaction to avoid any risk, as the loan is automatically repaid if the arbitrage is successful.
To create a flash loan arbitrage bot, you'll need coding skills in Solidity, the programming language for Ethereum smart contracts. Start by writing a smart contract that interacts with flash loan providers like Aave or dYdX. Integrate the contract with a DEX aggregator to find the best prices. Finally, deploy the smart contract and test it thoroughly on a testnet before using it on the mainnet.