RocketArb — minipool premium arbitrage with Rocket Pool staking

If you're creating a new minipool when staking with Rocket Pool, you can use Rocketarb to arbitrage the market premium on rETH with the creation cost of rETH.

Rocketarb leverages flash loans to take advantage of the price differences between rETH and its creation cost, resulting in potential profit while helping stabilize the market price of rETH.

The rETH Premium

Rocket Pool's rETH tokens often trade at a premium on secondary markets like Uniswap or 1inch due to the laws of supply and demand.

The constant demand for rETH and limited supply creates an arbitrage opportunity, allowing users to benefit from the price difference between the higher secondary market price and the reference price calculated by Rocket Pool's Oracle DAO network.

One of the core aspects of Rocket Pool's staking design is the deposit queue, where ETH awaits the creation of a new minipool before it can be staked and start generating returns.

The deposit pool has a capacity limit of 18,000 ETH to prevent dilution of participants' APR. An arbitrage opportunity arises every time a new minipool is launched and 16 ETH of space opens up in the deposit queue.

To capitalize on this arbitrage opportunity, Rocketarb, a third-party smart contract, was created by a Rocket Pool community member and has been executed over 600 times in the past two months, generating more than 220 free ETH.

How RocketArb works

Rocketarb creates a transaction to call the rocketarb contract, which will flash loan 16 WETH, unwrap it to native ETH, deposit it in the Rocket Pool deposit pool (using the newly created space from the minipool deposit), sell the resulting minted rETH using 1Inch, repay the flash loan, and send any profit back to your node account.

By doing so, it allows users to benefit from the rETH premium created by the temporary space in the deposit pool. The process is completed in a single transaction using Flashbots, ensuring that the user is not outpaced by bots.

To use RocketArb while on Docker mode:

1. Create the minipool with the Rocketpool smartnode (>= 1.7.0). Stop before the final ARE YOU SURE... prompt and cancel it.
2. Clone this repo (git clone https://github.com/xrchz/rocketarb), and cd rocketarb.
3. Run ./scripts/rocketarb-docker.sh.
4. Pass the --help to see more options if something goes wrong.

To use RocketArb while on Native mode:

1. Create the minipool with the Rocketpool smartnode (>= 1.7.0). Stop before the final ARE YOU SURE... prompt and cancel it.
2. Ensure your node's RPC port is exposed locally as described here.
3. Install the requirements on your node machine: nodejs (>= 18), and npm.
4. Clone the repo (git clone https://github.com/xrchz/rocketarb), cd rocketarb, and npm install to download the js dependencies.
5. Run ./rocketarb.js.

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