Arbitrage

Most tokens on Lightbeam also trade in a Kumbaya pool. When the two prices drift apart, Lightbeam trades them back together.

What happens after every trade

After each trade, Lightbeam's router compares the market's order book with its Kumbaya pool:

• If someone on the book is selling below the pool's price, after both fees, the router buys from the book and sells to the pool.
• If someone on the book is buying above the pool's price, after both fees, the router buys from the pool and sells to the book.

It does this in the same transaction as your trade, with a flash swap, so it needs no money of its own. It only takes trades that make a profit after fees; if prices change before it runs, it does nothing. If the arbitrage fails, your trade still goes through.

The profit goes to you, the trader whose transaction ran it.

The arbitrage button

If the book drifts from Kumbaya's price between trades, the trade panel says so: "The book is away from the Kumbaya price. Arbitrage it and keep the profit." Press Arbitrage to run it on its own and collect the profit, with nothing else to trade.

Why it matters

• Fair prices on a thin book. Kumbaya's liquidity stands behind Lightbeam's book, so a small book still trades at the market price.
• More fills for liquidity providers. When Kumbaya's price moves through your orders, the next arbitrage fills them, even if no one on Lightbeam wanted that trade.
• Better swaps. With the two prices in line, swaps that split between book and pool get the best of both.