IDEX is the first DEX to integrate an Automated Market Maker (AMM) into a Central Limit Order Book (CLOB) design. AMMs use a pricing function to offer liquidity to the market at a specific price and only update when a user trades against it. This programmatic approach not only lowers the barrier to entry of market making, but also inherently creates arbitrage opportunities. Takers pay a fee to AMM LPs for the right to rebalance and keep prices in line and pocket the difference for themselves!
IDEX has integrated with Hummingbot to make it as easy as possible to run a trading bot and capitalize on AMM arbitrage opportunities. Hummingbot is open-source software that lets you build and run customizable trading strategies. The software includes built-in strategies that make it easy for novices to get started, as well as a robust set of features that allow experts to further customize and refine their trading.
Hummingbot features an arbitrage trading strategy as one of the standard configurations. Running this strategy requires depositing funds and running Hummingbot on both IDEX and a secondary exchange, e.g. Binance. When the price changes on the secondary exchange, Hummingbot identifies and executes any profitable arbitrage strategies by buying on one exchange and selling on the other.
Disclaimer: Hummingbot is an independent product that is not maintained by the IDEX team. All types of trading, including arbitrage, carry its own form of risk. Please see the TOS for more details.