The Bancor Arb Fast Lane protocol is now live in beta! See the open source code on Github.
Fast Lane is a permissionless protocol that allows any user to perform arbitrage between Bancor ecosystem protocols and external on-chain exchanges and redirect arbitrage profits back to the Bancor ecosystem. With Fast Lane, Bancor ecosystem protocols can now internalize arbitrage profits that in other DEXs are lost to external agents like arbitrage bots and MEV bots.
Fast Lane currently supports arbitrage between Bancor v3, Uniswap v2, Uniswap v3 and Sushi. Per the Fast Lane proposal, arbitrage trades via the Fast Lane contract are exempt from Bancor v3 pool fees, giving Fast Lane users an advantage over regular arbitrageurs (hence the name, Fast Lane). There are plans to add support for additional protocols, including Carbon, the newest protocol to launch under the Bancor ecosystem umbrella.
In order to redirect value back to the Bancor ecosystem, 50% of profits earned by Fast Lane are automatically converted to BNT and burned. The remaining 50% of profits are automatically paid as a “finder’s fee” (capped at 100 BNT) to the user who finds the arb opportunity and sends it to Fast Lane. These values are DAO-controlled parameters, and designed to make Fast Lane economically self-sustaining.
BNT burning from Fast Lane can currently be tracked via the Bancor Alerts Telegram or in the “onchain-events” channel of the Bancor Discord, with more community analytics tools expected soon. A recent example of a Fast Lane arbitrage transaction can be found here. In this transaction, 185 BNT was burned and the maximum of 100 BNT was paid to the caller.
Fast Lane was built not only to improve value capture in the Bancor ecosystem, but also to improve the efficiency of ecosystem liquidity. Thanks to the open-source and permissionless nature of Fast Lane and its bot framework, more users are now able to find and close arbitrage opportunities, helping to ensure that ecosystem liquidity is trading at rates similar to the rest of the market.
How Fast Lane Works
Users rely on Fast Lane’s bot framework to:
- search for arbitrage opportunities using custom parameters, including which exchanges and tokens are monitored, and the minimum profit to execute a trade
- calculate the most profitable trades (accounting for gas cost and trade fees); and
- inform the Fast Lane smart contract of the arbitrage
Upon receiving these details, the Fast Lane contract automatically:
- performs a BNT flash loan
- executes 3+ trades to close the arbitrage opportunity (Bancor v3 trades are fee-less, and the last trade is always into BNT)
- returns the BNT flash loan
- sends a % of BNT profits to the BNT contract where it is burned
- sends the remaining % of BNT profits to the user who input the arb
Summary
Arb Fast Lane is a first-of-its-kind innovation that aims to:
- lower the barrier for anyone to perform arbitrage in the Bancor ecosystem using their own custom parameters
- redirect arbitrage profits back to the Bancor ecosystem
- improve the efficiency and accuracy of ecosystem liquidity
We’re thrilled to see this groundbreaking piece of open-source DEX infrastructure in action, and for the Arb Fast Lane protocol to continue evolving. We encourage users to experiment with performing arbitrage via Fast Lane — instructions can be found at the Fast Lane Github, and technical community support is available in the Bancor Developers Telegram or Discord.
The Bancor Arb Fast Lane Protocol is Live! was originally published in Bancor on Medium, where people are continuing the conversation by highlighting and responding to this story.