How I made over $1000 one morning arbitraging cryptocurrencies

I had been following the launch MakerDao's new stablecoin, Dai. Their system involves involves the tokens, Mkr, Dai, which can each be exchanged for Ether. Dai is designed to trade for $1. Their exchange https://oasisdex.com has three markets: MKR/W-ETH, W-ETH/DAI, and MKR/DAI. I was able to cycle through these three and end up with more money after each trip.

The first thing was noticing the prices. Shortly, after launch there were buy orders for MKR at 1250 DAI/MKR. Yet, I had noticed I could buy for 1.5 Eth. This mean, if only I could buy Eth for less than 833.333 DAI, I'd make a profit. Fortunately, for me Ether was trading for around 800 DAI at the time.

So, I took some Ether and wrapped it on OasisDex to begin the process. Then, I bought MKR with W-ETH. Then, I sold the MKR for DAI. Then, I sold the DAI to go back to W-ETH, and I had more W-ETH than I had started with. I had been a bit nervous during the process that someone else would figure out, and the opportunity would close, but it didn't. I could've tried to automate it, but I didn't want to spend the time because I feared the opportunity might close.

I repeated the cycle a few times. After each transaction, I had to confirm through MetaMask, and wait for the next Ethereum blockchain for it to complete. Further, each transaction took gas, and I worried the gas price was going to be too high. The W-ETH/DAI market would move during this time, and I watched http://www.gdax.com to try to get a good price. Finally, after a few round trips I had more W-ETH than I started with. I was able to convert the W-ETH, and send some to CoinBase to take my profit.

I felt a bit enslaved to blockchain cycling through the transaction. After, I felt a bit jubilant to have beat the system. I suppose this is just another in Ethereum trading. I felt like I was one of the old arbitrageurs physically moving to quickly close a trade. Today, most of the markets are defined by super-fast machines arbitraging in fractions of a second. I suppose the existence of these sorts of opportunities reflects the immaturity of the blockchain markets. Further, I think the state of blockchain are still in the early stages, and more needs to be done to turn them into fully mature markets.

Twitter: https://twitter.com/gersh17.