mev-beta/docs/2_architecture/SYSTEM_ARCHITECTURE.md

MEV Bot System Architecture Documentation

Overview

This document provides a comprehensive overview of the MEV Bot system architecture, detailing how all components work together to detect and execute arbitrage opportunities on the Arbitrum network. The system is designed with modularity, security, and performance as core principles.

System Architecture

The MEV Bot follows a modular architecture with clearly defined components that communicate through well-defined interfaces. The architecture is divided into several layers:

1. Application Layer - Main application entry point
2. Service Layer - Core business logic and orchestration
3. Processing Layer - Data processing and analysis
4. Infrastructure Layer - Low-level utilities and external integrations
5. Security Layer - Security and key management

Component Interactions

High-Level Data Flow

[Arbitrum Sequencer] 
        ↓
[Monitor Package] ←→ [Rate Limiter]
        ↓
[Event Parser] 
        ↓
[Market Pipeline] 
        ↓
[Market Scanner] ←→ [Market Manager] ←→ [Cache]
        ↓                ↓
[Arbitrage Service] ←→ [Security Package]
        ↓                ↓
[Arbitrage Executor] ←→ [Database]
        ↓
[Ethereum Network]

Detailed Component Interactions

1. Main Application (cmd/mev-bot)

The main application initializes all components and orchestrates their interactions:

• Configuration Loading: Loads YAML configuration with environment variable overrides
• Component Initialization: Creates instances of all core components
• Lifecycle Management: Manages start/stop lifecycle of services
• Graceful Shutdown: Ensures proper cleanup on termination

Key interactions:

• Loads configuration → internal/config
• Initializes logging → internal/logger
• Creates Ethereum client → ethereum/go-ethereum
• Initializes key manager → pkg/security
• Creates arbitrage database → pkg/arbitrage
• Creates arbitrage service → pkg/arbitrage
• Starts monitoring → pkg/monitor

2. Arbitrage Service (pkg/arbitrage)

The core service orchestrates arbitrage detection and execution:

• Blockchain Monitoring: Uses monitor package for sequencer monitoring
• Event Processing: Processes swap events for arbitrage opportunities
• Opportunity Detection: Uses scanner for multi-hop path finding
• Execution Management: Executes profitable opportunities through executor
• Data Persistence: Stores opportunities and executions in database
• Statistics Tracking: Maintains performance metrics

Key interactions:

• Monitors sequencer → pkg/monitor
• Processes events → pkg/arbitrage/service.go
• Detects opportunities → pkg/scanner
• Executes arbitrage → pkg/arbitrage/executor.go
• Stores data → pkg/arbitrage/database.go
• Manages keys → pkg/security

3. Monitor Package (pkg/monitor)

Real-time monitoring of the Arbitrum sequencer:

• Sequencer Connection: Connects to Arbitrum sequencer via WebSocket
• Block Processing: Processes blocks for DEX transactions
• Event Subscription: Subscribes to DEX contract events
• Rate Limiting: Implements RPC rate limiting
• L2 Parsing: Parses Arbitrum L2 transactions

Key interactions:

• Connects to sequencer → ethereum/go-ethereum
• Parses transactions → pkg/arbitrum
• Rate limits RPC → internal/ratelimit
• Processes blocks → pkg/monitor/concurrent.go

4. Market Pipeline (pkg/market)

Multi-stage processing pipeline for market data:

• Transaction Decoding: Decodes transactions to identify swaps
• Market Analysis: Analyzes market data for opportunities
• Arbitrage Detection: Detects arbitrage opportunities
• Concurrent Processing: Uses worker pools for throughput

Key interactions:

• Decodes transactions → pkg/market/pipeline.go
• Analyzes markets → pkg/market/pipeline.go
• Detects arbitrage → pkg/market/pipeline.go
• Manages workers → pkg/market/fan.go

5. Market Scanner (pkg/scanner)

Advanced market scanning with sophisticated analysis:

• Event Processing: Processes market events concurrently
• Profit Calculation: Calculates arbitrage profitability
• Opportunity Ranking: Ranks opportunities by profitability
• MEV Analysis: Analyzes MEV competition

Key interactions:

• Processes events → pkg/scanner/concurrent.go
• Calculates profits → pkg/profitcalc
• Ranks opportunities → pkg/profitcalc
• Analyzes competition → pkg/mev

6. Market Manager (pkg/market)

Pool data management and caching:

• Pool Data Caching: Caches pool data for performance
• Data Retrieval: Fetches pool data from blockchain
• Cache Management: Manages cache size and expiration
• Singleflight: Prevents duplicate requests

Key interactions:

• Caches data → pkg/market/manager.go
• Fetches from blockchain → pkg/uniswap
• Manages cache → pkg/market/manager.go

7. Uniswap Pricing (pkg/uniswap)

Optimized Uniswap V3 pricing calculations:

• Mathematical Functions: sqrtPriceX96, tick, and price conversions
• Cached Functions: Performance-optimized cached calculations
• Precision Handling: uint256 arithmetic for financial calculations
• Benchmarking: Performance testing and optimization

Key interactions:

• Calculates prices → pkg/uniswap/pricing.go
• Optimizes performance → pkg/uniswap/cached.go
• Handles precision → github.com/holiman/uint256

8. Arbitrage Executor (pkg/arbitrage)

Secure arbitrage transaction execution:

• Transaction Signing: Signs arbitrage transactions securely
• MEV Competition: Analyzes and optimizes for MEV competition
• Gas Optimization: Optimizes gas pricing and limits
• Result Processing: Processes execution results

Key interactions:

• Signs transactions → pkg/security
• Analyzes competition → pkg/mev
• Optimizes gas → pkg/arbitrage/executor.go
• Processes results → pkg/arbitrage/executor.go

9. Security Package (pkg/security)

Comprehensive security management:

• Key Management: Secure private key storage and management
• Transaction Signing: Secure transaction signing with rate limiting
• Audit Logging: Security audit trails
• Key Rotation: Automated key rotation policies

Key interactions:

• Manages keys → pkg/security/keymanager.go
• Signs transactions → pkg/security/keymanager.go
• Logs audits → pkg/security/keymanager.go

10. Database (pkg/arbitrage)

Persistent data storage:

• SQLite Storage: Stores opportunities and executions
• Indexing: Indexed queries for performance
• Data Retrieval: Retrieves historical data
• Statistics: Provides performance metrics

Key interactions:

• Stores opportunities → pkg/arbitrage/database.go
• Stores executions → pkg/arbitrage/database.go
• Retrieves history → pkg/arbitrage/database.go
• Provides stats → pkg/arbitrage/database.go

Data Flow

1. Monitoring Phase

1. Sequencer Connection: Monitor connects to Arbitrum sequencer
2. Block Processing: Monitor processes new blocks for transactions
3. Event Detection: Monitor identifies DEX swap events
4. Event Forwarding: Events are forwarded to arbitrage service

2. Analysis Phase

1. Event Processing: Arbitrage service processes swap events
2. Significance Check: Determines if swap is large enough to analyze
3. Market Scanning: Scanner analyzes market for opportunities
4. Profit Calculation: Calculates potential profitability
5. Opportunity Ranking: Ranks opportunities by profitability

3. Execution Phase

1. Opportunity Validation: Validates arbitrage opportunities
2. MEV Analysis: Analyzes competition and optimizes bidding
3. Transaction Preparation: Prepares arbitrage transaction
4. Secure Signing: Signs transaction with key manager
5. Transaction Submission: Submits transaction to network
6. Result Processing: Processes execution results

4. Persistence Phase

1. Opportunity Storage: Stores detected opportunities
2. Execution Storage: Stores execution results
3. Statistics Update: Updates performance metrics
4. Audit Logging: Logs security-relevant events

Security Architecture

Layered Security Approach

1. Network Security: Rate limiting and secure connections
2. Data Security: Encrypted storage and secure transmission
3. Transaction Security: Secure signing and validation
4. Access Security: Key management and access controls
5. Audit Security: Comprehensive logging and monitoring

Key Security Features

• Encrypted Key Storage: Private keys stored with encryption
• Rate Limiting: Prevents abuse of signing operations
• Audit Trails: Comprehensive security logging
• Key Rotation: Automated key management policies
• Secure Configuration: Environment-based configuration

Performance Architecture

Concurrent Processing

• Worker Pools: Multiple worker pools for different operations
• Pipeline Processing: Multi-stage processing pipeline
• Fan-in/Fan-out: Efficient data distribution patterns
• Context Management: Proper resource cleanup

Caching Strategy

• Pool Data Caching: Cached pool information for performance
• Singleflight: Prevents duplicate expensive operations
• TTL Management: Automatic cache expiration
• Size Management: LRU-style cache eviction

Mathematical Optimization

• Cached Constants: Precomputed mathematical constants
• Uint256 Arithmetic: Efficient precision handling
• Benchmarking: Continuous performance monitoring
• Algorithmic Improvements: Optimized calculation methods

Scalability Architecture

Horizontal Scaling

• Worker Pool Scaling: Configurable worker counts
• Concurrent Processing: Parallel operation execution
• Load Distribution: Even distribution of work
• Resource Management: Efficient resource utilization

Vertical Scaling

• Memory Management: Efficient memory usage
• CPU Optimization: Optimized calculation algorithms
• Network Efficiency: Reduced RPC calls
• Database Scaling: Indexed queries and batch operations

Monitoring and Observability

Logging Architecture

• Structured Logging: Consistent log format
• Level-based Logging: Appropriate log levels
• Separate Concerns: Different log files for different purposes
• Security Logging: Specialized security audit logs

Metrics Collection

• Performance Metrics: Execution times and throughput
• Profitability Metrics: Profit analysis and tracking
• System Metrics: Resource utilization and health
• Error Metrics: Error rates and failure analysis

Alerting System

• Threshold-based Alerts: Alerts based on performance thresholds
• Security Alerts: Security-relevant event notifications
• Error Alerts: Error condition notifications
• Performance Alerts: Performance degradation notifications

Deployment Architecture

Production Deployment

• Secure Configuration: Environment-based configuration
• Monitoring Setup: Performance and security monitoring
• Backup Procedures: Regular data backup procedures
• Disaster Recovery: Recovery procedures and testing

Development Deployment

• Local Configuration: File-based configuration for development
• Debug Logging: Enhanced logging for debugging
• Test Endpoints: Development network endpoints
• Development Tools: Testing and debugging utilities

Future Architecture Enhancements

Microservices Architecture

• Service Decomposition: Break monolith into microservices
• API Gateway: Centralized API management
• Service Mesh: Service-to-service communication management
• Containerization: Docker-based deployment

Advanced Analytics

• Machine Learning: ML-based opportunity prediction
• Real-time Analytics: Streaming analytics platform
• Dashboard Integration: Real-time monitoring dashboards
• Predictive Modeling: Advanced market prediction

Cross-chain Support

• Multi-chain Monitoring: Support for multiple blockchains
• Cross-chain Arbitrage: Cross-chain opportunity detection
• Bridge Integration: Cross-chain bridge integration
• Unified Interface: Consistent interface across chains

Conclusion

The MEV Bot system architecture provides a robust, secure, and performant platform for detecting and executing arbitrage opportunities. The modular design allows for easy maintenance and extension, while the layered security approach ensures safe operation. The concurrent processing architecture enables high throughput, and the comprehensive monitoring system provides visibility into system performance and security.