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MEV-$DPI liquidity migration - Impact arbitrage opportunities

Description

INDEXcoop.com are stopping liquidity mining the uniswap v2 pool in the next 24 hours.

As a result we expect AUM and liqudity in the v2 pool to drop: https://v2.info.uniswap.org/pair/0x4d5ef58aac27d99935e5b6b4a6778ff292059991

and liquidity / volume to increase in this pool https://info.uniswap.org/#/pools/0x9359c87b38dd25192c5f2b07b351ac91c90e6ca7

(and possibly this one https://analytics.sushi.com/pairs/0x34b13f8cd184f55d0bd4dd1fe6c07d46f245c7ed )

https://www.coingecko.com/en/coins/defipulse-index#markets

$DPI arbitrage (by bots) is currenlty focused on the v2 pool with both mint and redeem Arb and arb between pools:

e.g. https://etherscan.io/tx/0x5095875c5c6c98196c7302189d81808f57f9a8de0bd64690ce33879b5a264de5

The other DEX pools look like they arb back to the v2 pool. e.g.

https://etherscan.io/tx/0x8b76722c65402bf46b9a9c9bd4195aec72ea90fc42bdefe560e8478d7ebf34ae

If the expected change in v2 liquidity AUM happens, then I expect that the v3 pool will become the one with deepest liqudity close to the rpice point and so the best oppertunity for issue / redemption arb.

Difficulty

Moderate (??) -

Is this a one-off opportunity or is it reoccurring?

Ongoing opportunity as DPI dex price drifts off the NAV.

Steps to capture MEV

List the steps that need to be taken to capture MEV from your protocol. As an example:

  1. Monitor DPI NAV and Dex price.
  2. Swap ETH for underlyign tokens using DEX liquidity.
  3. issue DPI from based on the set issuance contract ( https://etherscan.io/address/0xd8ef3cace8b4907117a45b0b125c68560532f94d )
  4. Sell DPI for ETH.
  5. The remainder is your profit

Other

INDEXcoop discord (or Set protocol discord) may be able to help.