Ethereum blockchain network overlaid with a stock market ticker, symbolizing DeFi and traditional markets.

Unlocking DeFi Secrets: How Non-Atomic Arbitrage Impacts Your Crypto

Rhea Morgan in Business & Economy December 2025 • 4 min read.

"Dive into the hidden world of decentralized finance (DeFi) and discover how non-atomic arbitrage shapes the crypto landscape. Is your portfolio at risk?"

The Ethereum ecosystem, once envisioned as a transparent and decentralized financial haven, has increasingly been characterized as a 'dark forest' due to the prevalence of Maximal Extractable Value (MEV). MEV refers to the profit that can be extracted by strategically including, excluding, or reordering transactions within a block. While much attention has been paid to on-chain MEV strategies like sandwich attacks and cyclic arbitrage, a less understood but equally significant form of MEV is non-atomic arbitrage.

Non-atomic arbitrage exploits price discrepancies between decentralized exchanges (DEXes) on the Ethereum blockchain and external markets, such as centralized exchanges (CEXes) or DEXes on other blockchains. This type of arbitrage involves actions both on and off the Ethereum blockchain, making it more complex to analyze and potentially more lucrative for sophisticated traders.

This article sheds light on the prevalence and impact of non-atomic arbitrage, revealing its centralizing tendencies and potential security implications. By understanding this hidden force, you can better navigate the DeFi landscape and protect your crypto investments.

What is Non-Atomic Arbitrage and Why Does It Matter?

Ethereum blockchain network overlaid with a stock market ticker, symbolizing DeFi and traditional markets.

In the world of decentralized finance, DEXes have revolutionized cryptocurrency trading. Unlike traditional centralized exchanges that rely on order books, DEXes like Uniswap, Curve, and SushiSwap use automated market makers (AMMs). AMMs employ liquidity pools, where users trade against reserves of two or more cryptocurrencies. Prices within these pools are determined by mathematical formulas, leading to potential price differences between DEXes and other exchanges.

Arbitrageurs exploit these price differences by buying assets where they are cheaper and selling them where they are more expensive. Atomic arbitrage occurs within a single transaction on the same blockchain, while non-atomic arbitrage involves trading across different blockchains or between DEXes and CEXes.

Profit Potential: Non-atomic arbitrage can be highly profitable, attracting sophisticated traders and impacting overall market dynamics.
Centralization Risks: The pursuit of non-atomic arbitrage can lead to centralization in block construction, as specialized builders gain an advantage.
Security Concerns: High-value non-atomic arbitrage transactions can create security risks, potentially making the Ethereum network vulnerable to attacks.

The shift from Proof-of-Work (PoW) to Proof-of-Stake (PoS) on Ethereum, coupled with the rise of proposer-builder separation (PBS), has further amplified the impact of non-atomic arbitrage. PBS allows specialized builders to construct blocks with optimized transaction order, maximizing MEV extraction. This creates opportunities for arbitrageurs to collaborate with builders and validators, further solidifying their advantage.

Navigating the DeFi Landscape: What You Can Do

Non-atomic arbitrage is a significant force in the DeFi ecosystem, influencing market dynamics and creating both opportunities and risks. By understanding its complexities, you can make more informed decisions and navigate the evolving crypto landscape with greater confidence.

About this Article -

This article was crafted using a human-AI hybrid and collaborative approach. AI assisted our team with initial drafting, research insights, identifying key questions, and image generation. Our human editors guided topic selection, defined the angle, structured the content, ensured factual accuracy and relevance, refined the tone, and conducted thorough editing to deliver helpful, high-quality information.See our About page for more information.

This article is based on research published under:

DOI-LINK: https://doi.org/10.48550/arXiv.2401.01622,

Title: Non-Atomic Arbitrage In Decentralized Finance

Subject: cs.ce q-fin.gn

Authors: Lioba Heimbach, Vabuk Pahari, Eric Schertenleib

Published: 03-01-2024

Everything You Need To Know

What exactly is Non-Atomic Arbitrage in DeFi, and how does it differ from Atomic Arbitrage?

Non-Atomic Arbitrage in Decentralized Finance (DeFi) exploits price discrepancies between Decentralized Exchanges (DEXes) on the Ethereum blockchain and external markets, like Centralized Exchanges (CEXes) or DEXes on other blockchains. It involves actions both on and off the Ethereum blockchain, which makes it more complex and potentially more lucrative. In contrast, Atomic Arbitrage operates within a single transaction on the same blockchain, taking advantage of price differences within that specific environment. Non-atomic arbitrage involves moving assets between different blockchains or between on-chain and off-chain entities to capitalize on price variations.

How does Non-Atomic Arbitrage potentially centralize the Ethereum ecosystem?

The pursuit of Non-Atomic Arbitrage can lead to centralization within the Ethereum ecosystem. Sophisticated traders, who engage in this type of arbitrage, often collaborate with specialized block builders and validators. These builders, using tools like Proposer-Builder Separation (PBS), optimize transaction order to maximize Maximal Extractable Value (MEV) extraction, which benefits the arbitrageurs. This creates an advantage for those with advanced technical and financial resources, potentially marginalizing smaller participants and leading to a more concentrated control over block construction and transaction processing.

What role do Decentralized Exchanges (DEXes) play in enabling Non-Atomic Arbitrage?

DEXes like Uniswap, Curve, and SushiSwap are essential for Non-Atomic Arbitrage. These exchanges use automated market makers (AMMs) and liquidity pools. The price differences between these DEXes and other exchanges (CEXes or DEXes on other blockchains) create opportunities for arbitrageurs. They buy assets where they are cheaper on one exchange and sell them where they are more expensive on another, capitalizing on these price discrepancies. The AMM mechanism and liquidity pools facilitate the price variations that arbitrageurs exploit.

What are the security implications of Non-Atomic Arbitrage on the Ethereum network?

High-value Non-Atomic Arbitrage transactions can introduce security risks to the Ethereum network. As large sums of assets move between exchanges, arbitrageurs may become targets for attacks. Sophisticated actors could attempt to manipulate transactions or exploit vulnerabilities within the process, potentially leading to financial losses or disruption of the network. The concentration of value in these transactions also increases the incentive for malicious activities targeting the arbitragers or the underlying infrastructure.

How has the shift from Proof-of-Work (PoW) to Proof-of-Stake (PoS) and the rise of Proposer-Builder Separation (PBS) impacted Non-Atomic Arbitrage?

The transition from Proof-of-Work (PoW) to Proof-of-Stake (PoS) on Ethereum, combined with the introduction of Proposer-Builder Separation (PBS), has amplified the effects of Non-Atomic Arbitrage. PBS enables specialized builders to construct blocks with optimized transaction order, maximizing MEV extraction. This provides Non-Atomic Arbitrageurs with more sophisticated tools and opportunities for profits, strengthening their advantages and influence. The change has thus made it easier for arbitrageurs to execute complex trades, potentially increasing the frequency and volume of arbitrage activities, and further complicating the DeFi landscape.