The power of arbitrage

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Arbitrage is a business model that takes advantage of price differences of a specific product on different markets. It's something as old as commerce. In the middle ages on the silk road Europeans where taking silver to Asia where it had much more value. They sold the silver there and bought spices. These spices were were much cheaper in Asia than in Europe. The huge price differences allowed them to cover the risks linked to travelling impressive distances.

Today arbitrage has become much easier

You don't need to travel to Asia to make a profit with arbitrage today. Arbitrage can be done with a couple of clicks of your mouse button. The crypto world is a perfect example. There are a lot of people who make profits from small price differences of crypto prices between unconnected markets. However there are many actors playing this game and they tend to have a lead in infrastructure, resources and knowledge over newebies.

NFT's are perfect for arbitrage

The crypto world and especially blockchains are getting more and more interconnected and this opens new potential for arbitrage.

Let's take the example of Splinterlands Untamed packs. These packs are now sold out on the Splinterlands website. You can still get these packs on secondary markets. What is interesting is that there are several of these markets.

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You can send your Untamed packs from the Splinterlands Website to 3 different blockchains and their according markets

From the Splinterlands game you can sent your untamed packs in a tokenized form to Hive, Steem or WAX. On all these platforms there is a market to sell and buy these packs. The market on Steem is very dry but on Hive-Engine and WAX, there are quite a lot of Untamed packs traded.

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On the WAX atomic market, Untamed packs can be bought for 2.69$ worth of WAX

What is interesting to look at is the price differences. On Wax Untamed packs are for sale at the moment for 2.7 $ worth of WAX. However there is a fee linked to sales on WAX. The seller will get only about 91% of that value. So if you sell a pack for 2.7$, you will get 2.45$ worth of Wax. The buyer will pay 2.7$ worth of WAX.

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The price on Hive engine is at current hive prices 2.21$ to buy and 2.94$ to sell

If you look at the prices on Hive-Engine, a pack costs 2.94$ worth of Hive. The buy price is 2.21$ worth of Hive. On Hive-Engine there are no transaction costs. You just pay a 1% fee when you deposit or withdraw hive.

You could now play the market by using these price differences.

Tertiary markets

The great thing about NFT's is that everybody can create a market for them with a shop script. We did that in our Liotes Shop where we sell Untamed packs for 2.19$ at the moment. To pay the packs, you need LEN tokens that you can purchase on Hive-Engine.

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10% of all the sales that are made in the Liotes Shop are used to burn LEN tokens. Be aware that the number of packs are limited

If you buy a pack for 2.19$ you can sell it guaranteed for 2.21$ on hive-engine (buy price). Or you can take a bit more risk and put it for sale on WAX for 2.7$ and make 0.26$ profit with each pack (after deduction of market costs). You can even try to sell it for 2.94$ on Hive-Engine and make 0.75$ profit per pack!

Of course markets fluctuate and it may take some time till you can sell the packs. However you can make a profit of up to 34% with a couple of clicks. Worst case you keep the packs and you wait until the price goes up even more...

Arbitrage can be very powerful, especially when you have an edge over others, like knowing a tertiary market that not everybody is aware of !


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These are good points. There is a lot of emphasis on buying and holding in the crypto world, but it’s important to have multiple tricks up your sleeve when it comes to anything in the world of finance. Arbitrage can result in big returns very quickly if you are willing to take on the extra risk. !LUV

I like to apply the concept of arbitrage with goods and products that I would want to buy anyways. In a way the worst case scenario is that you pay too much for a certain good and you won't be able to sell it for profit. If I would have bought this good anyway, then there isn't that much risk involved.

Thanks a lot for your comment!

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I actually bought a couple in the Liotes shop, pulled out a Yodin Zaku in one of them and sold it for $55.

In any case, there's nothing wrong with holding UNTAMED packs for a while either, see how ORB and BETA went up for instance on the market. But I guess I'm personally too much into the game to just be holding closed packs ;).

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Darn! I sold you the pack with Yodin Zaku and I don't have it! :) :)

Just kidding... Happy to see that worked out great for you... I have no doubts you will come for more soon :)

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That's a very good example of arbitrage. Actually, this is just the beginning. There is not enough of this kind of content to really make a good and big trade. I think this will really take off when DeFi establishes these arbitrage relationships because that's where the big money is :)

I think this will really take off when DeFi establishes these arbitrage relationships because that's where the big money is :)

You are right about that! We can already see some great opportunities in DeFi, but a lot more is coming in the future...

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@liotes, you were given LUV from @horstman5. About LUV: https://peakd.com/@luvshares