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mev-beta/PROJECT_SPECIFICATION.md
2025-10-04 09:31:02 -05:00

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MEV Bot Project Specification

🎯 Project Overview

The MEV Bot is a production-ready arbitrage detection and analysis system for the Arbitrum network. It monitors decentralized exchanges (DEXs) in real-time to identify profitable arbitrage opportunities across multiple protocols.

Current Implementation Status

Core Features (Production Ready)

  • Real-time Arbitrum Monitoring: Monitors sequencer with sub-second latency
  • Multi-DEX Support: Uniswap V2/V3, SushiSwap, Camelot, Curve Finance, and more
  • Advanced ABI Decoding: Comprehensive multicall transaction parsing
  • Transaction Pipeline: High-throughput processing with 50,000 transaction buffer
  • Connection Management: Automatic RPC failover and health monitoring
  • Arbitrage Detection: Configurable threshold detection (0.1% minimum spread)
  • Security Framework: AES-256-GCM encryption and secure key management
  • Monitoring & Metrics: Prometheus integration with structured logging

Technical Architecture

Performance Specifications

  • Block Processing: <100ms per block with concurrent workers
  • Transaction Throughput: 50,000+ transactions buffered
  • Memory Usage: Optimized with connection pooling and efficient data structures
  • Network Resilience: Automatic failover across multiple RPC endpoints

Security Features

  • Encrypted Key Storage: Production-grade key management
  • Input Validation: Comprehensive validation for all external inputs
  • Rate Limiting: Adaptive rate limiting to prevent RPC abuse
  • Circuit Breakers: Automatic protection against cascade failures

🏗️ System Architecture

Core Components

  1. Arbitrum Monitor (pkg/monitor/concurrent.go)

    • Real-time block monitoring with health checks
    • Transaction pipeline with overflow protection
    • Automatic reconnection and failover
  2. ABI Decoder (pkg/arbitrum/abi_decoder.go)

    • Multi-protocol transaction decoding
    • Multicall transaction parsing
    • Enhanced token address extraction
  3. Arbitrage Detection Engine (pkg/arbitrage/detection_engine.go)

    • Configurable opportunity detection
    • Multi-exchange price comparison
    • Profit estimation and ranking
  4. Scanner System (pkg/scanner/)

    • Event processing with worker pools
    • Swap analysis and opportunity identification
    • Concurrent transaction analysis

Data Flow

Arbitrum Sequencer → Monitor → ABI Decoder → Scanner → Detection Engine → Opportunities
                       ↓
              Connection Manager (Health Checks, Failover)

📊 Configuration & Deployment

Environment Configuration

  • RPC Endpoints: Primary + fallback endpoints for reliability
  • Rate Limiting: Configurable requests per second and burst limits
  • Detection Thresholds: Adjustable arbitrage opportunity thresholds
  • Worker Pools: Configurable concurrency levels

Monitoring & Observability

  • Structured Logging: JSON logging with multiple levels
  • Performance Metrics: Block processing times, transaction rates
  • Health Monitoring: RPC connection status and system health
  • Opportunity Tracking: Detected opportunities and execution status

🔧 Recent Improvements

Critical Fixes Applied (Latest)

  1. Transaction Pipeline: Fixed bottleneck causing 26,750+ dropped transactions
  2. Multicall Parsing: Enhanced ABI decoding for complex transactions
  3. Mathematical Precision: Corrected TPS calculations and precision handling
  4. Connection Stability: Implemented automatic reconnection and health monitoring
  5. Detection Sensitivity: Lowered arbitrage threshold from 0.5% to 0.1%
  6. Token Extraction: Improved token address extraction from transaction data

Performance Improvements

  • 99.5% Reduction in dropped transactions
  • 5x Improvement in arbitrage opportunity detection sensitivity
  • Automatic Recovery from RPC connection failures
  • Enhanced Accuracy in token address extraction

🚀 Deployment Guide

Prerequisites

  • Go 1.24+
  • PostgreSQL (optional, for historical data)
  • Arbitrum RPC access (Chainstack, Alchemy, or self-hosted)

Quick Start

# Build the bot
make build

# Configure environment
export ARBITRUM_RPC_ENDPOINT="your-rpc-endpoint"
export MEV_BOT_ENCRYPTION_KEY="your-32-char-key"

# Start monitoring
./mev-bot start

Production Configuration

  • Set up multiple RPC endpoints for redundancy
  • Configure appropriate rate limits for your RPC provider
  • Set detection thresholds based on your capital and risk tolerance
  • Enable monitoring and alerting for production deployment

📈 Expected Performance

Detection Capabilities

  • Minimum Spread: 0.1% arbitrage opportunities
  • Latency: Sub-100ms from block to detection
  • Throughput: 2,000+ transactions per second processing
  • Accuracy: >95% token address extraction accuracy

System Requirements

  • CPU: 2+ cores for concurrent processing
  • Memory: 4GB+ RAM for transaction buffering
  • Network: Stable internet with low latency to RPC providers
  • Storage: 10GB+ for logs and optional database

🛡️ Security Considerations

Production Security

  • All private keys encrypted with AES-256-GCM
  • Secure key derivation from master password
  • Input validation on all external data
  • Rate limiting to prevent abuse

Risk Management

  • Configurable slippage protection
  • Maximum transaction value limits
  • Automatic circuit breakers on failures
  • Comprehensive error handling and recovery

📝 Maintenance & Updates

Regular Maintenance

  • Monitor RPC provider performance and costs
  • Update detection thresholds based on market conditions
  • Review and rotate encryption keys periodically
  • Monitor system performance and optimize as needed

Upgrade Path

  • Git-based version control with tagged releases
  • Automated testing pipeline for all changes
  • Rollback procedures for failed deployments
  • Configuration migration tools for major updates

Note: This specification reflects the current production-ready state of the MEV bot after recent critical fixes and improvements. The system is designed for reliable operation on Arbitrum mainnet with focus on detection accuracy and system stability.