mev-beta/docs/project-plan.md

MEV Bot Project Plan

Overview

This document outlines the comprehensive plan for developing a high-performance MEV (Maximal Extractable Value) bot with modular architecture supporting multiple transport mechanisms. The bot will monitor the Arbitrum sequencer for potential swap opportunities and identify profitable arbitrage opportunities.

Project Goals

1. Build a modular MEV bot with independent components
2. Implement high-frequency, low-latency communication between modules
3. Support multiple transport mechanisms (shared memory, Unix sockets, TCP, WebSockets, gRPC)
4. Enable deployment as monolithic or distributed system
5. Implement robust lifecycle management for all modules
6. Ensure deterministic transaction ordering for arbitrage opportunities

Architecture Summary

Core Components

1. Configuration Manager - Centralized configuration handling
2. Event Parser - DEX event detection and parsing
3. Market Monitor - Arbitrum sequencer monitoring
4. Market Pipeline - Transaction processing pipeline
5. Market Scanner - Arbitrage opportunity detection
6. Execution Engine - Transaction execution
7. Risk Manager - Risk assessment and management
8. Data Store - Persistent storage for market data

Communication Layer

• Universal Message Bus supporting multiple transports
• Smart Router for automatic transport selection
• Module Manager for lifecycle control
• WebSockets/gRPC for external interfaces

Development Phases

Phase 1: Foundation (Weeks 1-2)

• Set up project structure and configuration management
• Implement basic Arbitrum sequencer monitoring
• Create event parser for DEX interactions
• Establish core data structures and interfaces

Phase 2: Pipeline & Scanner (Weeks 3-4)

• Develop market processing pipeline
• Implement market scanner with concurrency support
• Add Uniswap V3 pricing calculations
• Create basic arbitrage detection logic

Phase 3: Communication Layer (Weeks 5-6)

• Implement universal message bus
• Add shared memory transport
• Add Unix socket transport
• Create smart router for transport selection

Phase 4: Advanced Features (Weeks 7-8)

• Add TCP/WebSocket transport support
• Implement gRPC control interface
• Develop module lifecycle management
• Create transaction ordering system

Phase 5: Execution & Risk (Weeks 9-10)

• Build execution engine
• Implement risk management module
• Add data persistence layer
• Create monitoring and metrics

Phase 6: Testing & Optimization (Weeks 11-12)

• Comprehensive unit and integration testing
• Performance optimization
• Security auditing
• Documentation and examples

Module Specifications

Configuration Manager

• Load configuration from YAML file
• Override with environment variables
• Support hot reloading of configuration
• Validate configuration parameters

Event Parser

• Detect DEX interactions (Uniswap V2/V3, SushiSwap)
• Parse transaction data for swap events
• Identify token addresses and amounts
• Extract price and liquidity information

Market Monitor

• Connect to Arbitrum RPC and WebSocket endpoints
• Monitor sequencer for new blocks and L2 messages
• Extract transactions from blocks and parse L2 messages
• Process opportunities with high frequency (250ms intervals)
• Rate limiting for RPC calls
• Fallback endpoint support

Market Pipeline

• Multi-stage transaction processing
• Concurrent processing with worker pools
• Configurable pipeline stages
• Error handling and recovery

Market Scanner

• Analyze swap events for price impact
• Calculate arbitrage opportunities
• Worker pool for concurrent processing
• Caching for pool data
• Profitability filtering

Execution Engine

• Sign and submit arbitrage transactions
• Gas price optimization
• Transaction nonce management
• Error handling and retry logic

Risk Manager

• Position sizing
• Portfolio risk limits
• Market impact assessment
• Emergency stop functionality

Data Store

• Persistent storage for market data
• Configuration caching
• Performance metrics storage
• Historical data analysis

Communication Architecture

Transport Types

1. Shared Memory - Ultra-low latency for same-process modules
2. Unix Sockets - Low latency for local inter-process communication
3. TCP - Standard networking for remote modules
4. WebSockets - Real-time communication for monitoring
5. gRPC - High-performance RPC for control plane

Message Routing

• Topic-based message routing
• Automatic transport selection based on:
  • Message size
  • Destination location
  • Latency requirements
  • System load
• Dead letter queue for failed messages
• Message persistence for critical data

Module Lifecycle

• START/STOP/PAUSE/RESUME commands
• Health checks and status reporting
• Dependency management
• Graceful shutdown procedures

Performance Requirements

• Latency < 10 microseconds for critical path
• Throughput > 100,000 messages/second
• Sub-millisecond processing for arbitrage detection
• L2 message processing every 250ms
• Deterministic transaction ordering
• Horizontal scalability

Security Considerations

• Secure key management
• Rate limiting and DoS protection
• Input validation and sanitization
• Audit logging
• Secure communication channels

Testing Strategy

• Unit tests for each component
• Integration tests for module interactions
• Performance benchmarks
• Chaos engineering for fault tolerance
• Security penetration testing

Deployment Options

1. Monolithic - All modules in single process
2. Distributed - Modules as separate processes/services
3. Hybrid - Critical modules local, others remote
4. Clustered - Multiple instances for load distribution

Monitoring & Observability

• Real-time status dashboards
• Performance metrics collection
• Alerting for critical events
• Log aggregation and analysis
• Tracing for transaction flow

Documentation Requirements

• Installation and setup guide
• Configuration reference
• API documentation
• Deployment guides for each mode
• Troubleshooting guide
• Performance tuning guide

Success Metrics

• Transaction processing latency
• Arbitrage detection accuracy
• System uptime
• Resource utilization
• Profitability of executed trades

Risk Mitigation

• Circuit breakers for market volatility
• Position limits to prevent excessive exposure
• Graceful degradation under load
• Backup systems for critical components
• Regular security audits