Create an Arb bot DPI via KeeperDAO

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1

Simple Summary

Create an arbitrage bot on the DPI / ETH market and launch it during the KeeperDAO liquidity mining program. This way, DPI is always well priced on the market, the Index Coop starts a new lucrative business to fund further developments, and we’re getting new connections with the DeFi ecosystem.

Abstract

What is KeeperDAO ?
KeeperDAO is an on-chain liquidity underwriter for DeFi. Using KeeperDAO, people can pool their assets to earn passive income through liquidations, arbitrage, and other opportunities from all across DeFi.

Keepers borrow funds from a communal pool of compatible assets. Anyone can borrow from the pool to leverage on-chain opportunities. Profits from the on-chain opportunity are returned to the pool. Profits are distributed between Keepers and Liquidity Providers (LPs).

The mining incentive is live for 3 months only.

How can we benefit from this ?

  • Setting up an arbitrage BOT (becoming a Keeper) will ensure that DPI is well priced compared to its components, and increase the trading volume on the secondary market.
  • It will also allow us to mine ROOK (native KeeperDAO token) and benefit from a new source of income for the treasury. There is currently only one active Keeper per pool, mining 1 500 ROOK per day. There is a huge financial upside if we move fast.
  • Using KeeperDAO funds to process flash loans is free of charge, compared to the 0,1% fees of other protocols, making it s way more profitable than standalone arb bots.

High level specification

Arb script

Create a off-chain script that can do the following things:

1. Compare DPI price (DPIp) vs sum of its weighted components (WCp)

2. IF DPIp > WCp, then

  • Flash loan: borrow from KeeperDAO pool
  • Optimize profits: algorithm to be defined later - should take into account available KeeperDAO pools, slippage and gas costs (instant)
  • BUY WCp
  • Mint DPI
  • Sell DPI
  • Profit

3. IF DPIp < WCp, then

  • Flash loan: borrow from KeeperDAO pool
  • Optimize profits: algorithm to be defined later - should take into account available ETH pool, slippage and gas costs (instant)
  • BUY DPI
  • Redeem DPI
  • Sell WCp
  • Profit

Arb smart contract
Create an arb smart contract that is able to:

  • Process flash loans on the KeeperDAO pool
  • Trade several pairs on Dex (Uniswap, 1inch…)
  • Return profits to both KeeperDAO pool and Index Coop treasury

Here is an example of bot that is borrowing from the KeeperDAO pools. We just need to add the Uniswap connection and build the off-chain script. This will help us a lot in building the solution.

Detailed specification

To be defined later if approved.

How to ?

Let’s set up a small task force with product and dev ressources, and start as soon as possible.

Poll

Create a DPI Arb bot via KeeperDAO
  • Yes, create an Index Coop Arb bot !
  • No

0 voters

4 Likes
3

This could be pretty interesting as the Coop can bid at 0 spread. It will be just a matter of changing some code to point to KeeperDAO’s pool in the current arb bot (DeFi Pulse open sourced bot here)

Does anyone else want to help take ownership of this initiative? Alex and I can help out from the Set team. We also know a few people from KeeperDAO pretty well so we can reach out if needed.

4 Likes
4

If everyone agrees to do so, i’m sure that you can lead the initiative since you’re already in contact with the KeeperDAO team :slight_smile: Would be awesome. It should start really fast otherwise we’re going to miss the mining opportunity. Big fan of KeeperDAO. Let me know if I can help @richard

1 Like
5

I have basically 0 solidity experience but have been wanting to run the arb bot for a couple weeks and keep deprioritizing it. I can’t get that source code to compile for me but if someone can help me with that then I can change the code.

I think that arb bot only uses flash loans in one direction so we’d either need to deploy two contracts or change the code a bit. I might be misunderstanding the code though, I only spent a bit of time when I couldn’t get it to compile, and was planning on writing my own in Vyper for fun.

6

Yeah, let’s sync up. I wrote one that the Set team runs that uses a different implementation from this one

1 Like
7

Cool cool thanks :pray: let me finish up some things on the UI and with CREAM over the weekend and I’ll message you Monday

1 Like
8

Hi guys, just checking in to see if this is still being looked at? Thanks

1 Like