Detecting Arbitrages on a First-Come-First-Served Blockchain

The daily trading volume on Decentralized Exchanges (DEXs) reaching 4.3 billion USD showcases the size of the demand for such markets. Due to multiple markets offering the same assets, it is vital to have minimal price discrepancy between them, and the popular way to achieve such efficiency is through arbitrage trades. According to EigenPhi, close to 2 million USD in Maximal Extractable Value (MEV) profits are made every month by arbitrageurs on the Ethereum blockchain. Previous work have already discussed how arbitrage opportunities can be discovered and executed on such a network where the offered fee influences transaction ordering in a block. However, different ordering mechanisms exist, one of which is First-Come-First-Served (FCFS) where block proposers sequence transactions in the received order. In this work, we propose an algorithmic approach that can be utilized in an FCFS network for detecting arbitrage opportunities.