Bunny Hops and Blockchain Stops: Cross-Chain MEV Detection With N-Hops

TL;DR

This paper presents a new method for detecting multihop cross-chain arbitrage opportunities across multiple blockchain networks, revealing their rarity and the complexity of executing such strategies in decentralized finance.

Contribution

It introduces an algorithm for identifying sequence-dependent multihop arbitrage paths across 12 blockchains using a large transaction dataset, advancing cross-chain arbitrage analysis.

Findings

Multihop cross-chain arbitrage opportunities are very rare.

The proposed algorithm effectively detects arbitrage sequences across multiple ecosystems.

Multihop arbitrage execution faces significant practical challenges.

Abstract

This student paper introduces a novel methodology for the detection and analysis of multihop cross-chain arbitrage opportunities, wherein multihop denotes arbitrage sequences involving more than two transactional steps across distinct blockchain networks, executed using sequence-dependent strategies. Utilizing a comprehensive dataset comprising over 2.4 billion transactions recorded between September 2023 and August 2024 (encompassing 12 blockchain platforms and 45 cross-chain bridges) we design and implement an algorithm capable of identifying, sequence-dependent arbitrage paths spanning multiple ecosystems. Our empirical analysis demonstrates that such arbitrage opportunities are exceedingly infrequent, underscoring the inherent challenges associated with multihop execution in cross-chain environments.