# How to run an arbitrage bot? Every time USDL deviates from its 1 USD peg, an almost riskless arbitrage opportunity arises. The only potential downside is having to pay gas costs for a transaction that doesn't go through. See [here](https://lemma-support.gitbook.io/lemma/concepts-overview/usdl-price-stability) for the high level details explaining the concepts behind the price stability mechanism. ## Contract: LemmaUniswapV3ArbBot This contract is a reference implementation for an arbitrage bot that profits off of the price deviations of USDL. The high level steps in this implementation are: * Check if USDL has deviated from its 1 USD price on the Uniswap v3 WETH<>USDL pool * If USDL is worth more than 1 USD, then in a single transaction, the following happens: * A flashloan is used to borrow WETH * The WETH is used to mint USDL * The USDL is swapped for WETH in the Uniswap pool * The loan is repaid using the the profits in WETH * If USDL is worth less than 1 USD, then in a single transaction, the following happens: * A flashloan is used to borrow WETH * The WETH is swapped for USDL in the Uniswap pool * The USDL is redeemed for 1 USD worth of WETH * The loan is repaid using the the profits in WETH The repository with the reference contract implementation can be found here: ## Public Functions ### constructor ``` constructor( IERC20 _collateral, uint256 _perpetualDEXIndex, IUSDLemma _usdLemma, uint24 _poolFee, ISwapRouter _swapRouter, IERC3156FlashLender _flashLender) ``` Function purpose: initializes the bot contract & points it to the chosen Uniswap v3 pair to arbitrage (in the example above that would be the USDL/WETH pair) and to the USDLemma contracts. | Parameters | Description | Attribute | | ------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------ | | \_collateral |

Address for the collateral type to be used in the arbitrage.

eg. for a USDL<>WETH arbitrage, the \_collateral address would be the WETH address.

| ERC20 address, initially will be just [WETH - 0x82aF49447D8a07e3bd95BD0d56f35241523fBab1](https://arbiscan.io/address/0x82aF49447D8a07e3bd95BD0d56f35241523fBab1)​ | | \_perpetualDEXIndex | Index for derivative dex to be used (right now only MCDEX is integrated, and its corresponding index is 0). | Integer | | \_usdLemma | Address of [USDLemma](https://app.gitbook.com/s/SCzheGnJY2h51BCqMXm3/r/fnBmxe6wKixiAVKNAEzt/smart-contracts/core-contracts/usdlemma) contract. | ERC20 address, always will be:​[0xdb41ab644abca7f5ac579a5cf2f41e606c2d6abc](https://arbiscan.io/token/0xdb41ab644abca7f5ac579a5cf2f41e606c2d6abc) | | \_poolFee | ​[Fee tier](https://docs.uniswap.org/protocol/concepts/V3-overview/fees#pool-fees-tiers) for the USDL<>WETH uniswap V3 pool you will arbitrage. | Integer, you can pass in: 500, 3000 or 10000. Those respectively correspond to the following Uniswap fees: 0.05% 0.3% and 1%. | | \_swapRouter | Router for stateless execution of swaps against Uniswap V3 address, [here](https://github.com/Uniswap/v3-periphery/blob/main/deploys.md)​. | Smart contract address, will always be: [0xE592427A0AEce92De3Edee1F18E0157C05861564](https://arbiscan.io/address/0xE592427A0AEce92De3Edee1F18E0157C05861564) | | \_flashLender |

Source for the flashloan for the token type (\_collateral, initially just WETH) that conforms to ERC3156 standard.

If you would like to use a Uniswap V3 pair as a flashloan source, please see here how to deploy a ERC3156 wrapper.

| Smart contract address | ### arb ``` function arb(uint256 amountOfCollateralToBorrow, uint256 amountOfUSDLToMint) ``` Function purpose: execute the arbitrage steps listed above. | Argument | Description | Attribute | | -------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ----------------- | | amountOfCollateralToBorrow |

Amount of WETH to borrow via the flashloan.

​Here is a reference script for how to calculate that sum.

| WETH, 18 decimals | | amountOfUSDLToMint | Amount of USDL to be minted. If USDL needs to be redeemed then this should be 0. | USD, 18 decimals | --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://lemma-support.gitbook.io/lemma/smart-contracts/how-to-run-an-arbitrage-bot.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.