This article is from: Flashbots data analyst danning
Compiled by | Odaily Planet Daily (@OdailyChina); Translator | Azuma (@azuma_eth)
How much profit can MEV arbitrage bots actually make from CEX-DEX arbitrage?
No one could answer this question before, but we are excited to announce that a new paper using formal methods for measurement has finally been published (paper link: https://arxiv.org/abs/2507.13023). In the following, I will summarize all the core findings of the paper with a series of images and explanations.
Super Condensed Version
Profit? Quite considerable, but not as much as you think;
Bot strategies vary, but the excess returns of top traders mostly diminish within 0.5 to 2 seconds;
Market centralization is intensifying, and so is the field of block builders;
However, as competition among blockchain builders intensifies, the profit margins from CEX-DEX arbitrage are compressed year by year;
Bots are deeply integrated into the block building process in various ways;
The deeper the binding with block builders, the thinner the "surface" profit (which is actually transferred to related parties);
The smaller the market share of block builders, the higher the actual profit margin retained by their associated arbitrageurs;
- Even for the top two in the industry, block building remains a tough business (profits as thin as paper).
Relatively Detailed Version
In the 1 year and 7 months of data we collected, the performance of 19 leading CEX-DEX arbitrage bots is as follows:
Total trading volume reached $241 billion;
Extracted $233.8 million in profit;
Only retained $90.1 million in net earnings (after paying $143.7 million in shares to block builders);
Overall, the average profit margin for CEX-DEX arbitrage is 38.5%.
Based on the market share analysis of arbitrageurs, we confirm that the MEV market for CEX-DEX has reached a "highly monopolized" level.
Using the "League of Legends" ranking label system proposed by @0xRezin, we calculated the Binance markouts of arbitrage bots, defining their "total income" before hedging using a weighted average.
The data shows that most CEX-DEX arbitrage signals disappear rapidly within seconds. The median distribution reveals income peaks — the best hedging opportunity occurs in the 0.5-1.5 second range.
After deducting the shares paid to block builders, we obtained the upper limit valuation of Bot profits.
So, how do the current top three block builders fare when combined with the profit adjustments of arbitrageurs?
Since rsync (currently ranked third) abandoned the "order flow war" last year, its market share has significantly plummeted, but what went unnoticed is that its profit margin has rapidly rebounded from 5% to 25%+, bringing its overall profit margin (arbitrage + block building) to about 27%.
However, the top two block builders have limited profit capabilities.
During the 18-month data period, beaverbuild (currently ranked first) has an overall profit margin of only 7.92% (including arbitrage earnings), while Titan (currently ranked second) without self-operated arbitrage has a profit margin of only 5.85%.
Clearly, the opaque "order flow" trading makes this situation harder to explain.
In addition to the known combinations of beaverbuild + SCP, rsync + Wintermute, the correlation analysis reveals another set of significant exclusive cooperation cases. Observing the 30-day rolling correlation between "Kayle's trading volume share in Titan's block building" and "Titan's market share" reveals clues.
Our core conclusion is that block building is a low-profit business, and without holding order flows with extremely high MEV value, there are no entry opportunities in today's market.
Moreover, the current block auction mechanism has serious inefficiency issues. On one hand, the subsidy mechanism squeezes the profits of block builders; on the other hand, exclusive cooperation fractures order flows, extending the waiting time for transactions to be on-chain.
However, the current situation is not unchangeable. Flashbots' newly launched BuilderNet may be able to break the deadlock and enhance the earnings of block builders.
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