Analysis of MEV Bots Profits from CEX-DEX Arbitrage

A recent study utilized formal methods to conduct an in-depth analysis for the first time on the actual profitability of MEV Arbitrage Bots arbitraging between centralized exchange (CEX) and decentralized exchange (DEX). The study comprehensively examined the performance of 19 leading CEX-DEX Arbitrage Bots over a period of 1 year and 7 months, revealing some surprising findings.

Main Research Findings

1. Arbitrage Scale and Profit

• The trading volume of 19 top Bots reached 241 billion USD.
• Total withdrawal of $233.8 million in profits
• The net profit is $90.10 million ( paid $143.70 million ) to the block builders.
• The average profit margin is 38.5%

2. Market Concentration

Research confirms that the MEV market of CEX-DEX has shown a high degree of monopoly.

3. Arbitrage Opportunity

Most arbitrage opportunities disappear quickly within seconds, with the best hedging timing occurring in the 0.5-1.5 second range.

4. Earnings Status of Block Builders

• The third-ranked rsync abandoned the "order flow war," causing its profit margin to soar from 5% to over 25%.
• The profitability of the top two block builders is limited:
  • beaverbuild( ranks first) with a total profit margin of only 7.92%
  • Titan( ranks second) with a profit margin of only 5.85%

5. Collaboration between block builders and arbitrageurs

Research reveals exclusive cooperation cases of multiple groups of "block builders + arbitrageurs", such as beaverbuild with SCP, rsync with Wintermute, etc.

Research Conclusion

1. The profit margins for blockchain construction businesses are generally low.
2. New entrants lacking high-value order flow find it difficult to establish themselves.
3. The current block auction mechanism is inefficient:
   • The subsidy mechanism squeezes the profits of block builders.
   • Exclusive cooperation disrupts order flow, extending transaction confirmation time

However, emerging technologies like BuilderNet may bring new opportunities for enhancing the earnings of block builders. This research provides valuable empirical evidence for our in-depth understanding of the operational mechanisms of the MEV ecosystem.