Tutorial: Arbitrage Bot

5min
View Full GitHub example:
﻿https://github.com/drift-labs/example-bots/blob/master/src/arbitrage-bot.ts﻿
Getting Started
1. Create a connection and wallet object. 
It's important to safely load your private key outside of the code to ensure privacy.
JS
import { Connection, Keypair, PublicKey } from '@solana/web3.js';

// todo: rename to env variable with key
const privateKey = process.env.SOLANA_PRIVATE_KEY; 
const keypair = Keypair.fromSecretKey(
			Uint8Array.from(privateKey.split(',').map((val) => Number(val)))
		);
const wallet = new Wallet(keypair);
const connection = new Connection(endpoint);
import { Connection, Keypair, PublicKey } from '@solana/web3.js';

// todo: rename to env variable with key
const privateKey = process.env.SOLANA_PRIVATE_KEY; 
const keypair = Keypair.fromSecretKey(
			Uint8Array.from(privateKey.split(',').map((val) => Number(val)))
		);
const wallet = new Wallet(keypair);
const connection = new Connection(endpoint);
﻿
2. Install the @drift-labs/sdk. 
For more details, peek through SDK Documentation﻿.
JS
import {
	convertToNumber,
	DriftClient,
	initialize,
	PositionDirection,
} from '@drift-labs/sdk';

const sdkConfig = initialize({ env: 'mainnet-beta' });
const driftClientPublicKey = new PublicKey(
    sdkConfig.DRIFT_PROGRAM_ID
);

const driftClient = DriftClient.from(
    connection,
    wallet,
    driftClientPublicKey
);
import {
	convertToNumber,
	DriftClient,
	initialize,
	PositionDirection,
} from '@drift-labs/sdk';

const sdkConfig = initialize({ env: 'mainnet-beta' });
const driftClientPublicKey = new PublicKey(
    sdkConfig.DRIFT_PROGRAM_ID
);

const driftClient = DriftClient.from(
    connection,
    wallet,
    driftClientPublicKey
);
﻿
2. Initialize an account and deposit collateral (USDC) on Drift.
JS
[, userAccountPublicKey] =
			await driftClient.initializeUserAccountAndDepositCollateral(
				usdcAmount,
				userUSDCAccount.publicKey
			);
[, userAccountPublicKey] =
			await driftClient.initializeUserAccountAndDepositCollateral(
				usdcAmount,
				userUSDCAccount.publicKey
			);
﻿
 3. Pick a market and load the price. 
JS
const marketIndex = new BN(0); // SOL
markPrice = calculateMarkPrice(clearingHouse.getMarket(marketIndexBN))
console.log(convertToNum(markPrice))
const marketIndex = new BN(0); // SOL
markPrice = calculateMarkPrice(clearingHouse.getMarket(marketIndexBN))
console.log(convertToNum(markPrice))
﻿
4. Based on the current price, make a trade by passing a direction (LONG, SHORT) and size (USDC notional).
Optionally: You can set a limitPrice to place an Immediate or Cancel (IOC) order to help ensure your entryPrice comes as expected.
JS
const direction = PositionDirection.LONG(); // LONG
const amount = new BN(100000); // $1 (1e6 precision)
const limitPrice = markPrice.mul(1001).div(1000) // .1% tolerance (1e10 precision)

await clearingHouse.openPosition(
	direction,
	amount,
	marketIndex,
	limitPrice
);
const direction = PositionDirection.LONG(); // LONG
const amount = new BN(100000); // $1 (1e6 precision)
const limitPrice = markPrice.mul(1001).div(1000) // .1% tolerance (1e10 precision)

await clearingHouse.openPosition(
	direction,
	amount,
	marketIndex,
	limitPrice
);
﻿
Advanced
Take advantage of the SDK helpers that we've written for more measured trading:
For instance,calculateTargetPriceTradecalculate the liquidity available between the current markPrice to your targetPrice.
This function is highly recommended for arbitrageurs.
JS
const marketIndex = new BN(0);
const market = clearingHouse.getMarket(marketIndex);
const targetPrice = new BN(250.169 * MARK_PRICE_PRECISION);

const [direction, amount, entryPrice, newMarkPrice] =
						calculateTargetPriceTrade(
							market,
							targetPrice,
						);
						
await clearingHouse.openPosition(
	direction,
	amount,
	marketIndex,
	entryPrice
);
	
const marketIndex = new BN(0);
const market = clearingHouse.getMarket(marketIndex);
const targetPrice = new BN(250.169 * MARK_PRICE_PRECISION);

const [direction, amount, entryPrice, newMarkPrice] =
						calculateTargetPriceTrade(
							market,
							targetPrice,
						);
						
await clearingHouse.openPosition(
	direction,
	amount,
	marketIndex,
	entryPrice
);
	
﻿
﻿
Updated 15 May 2023
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TABLE OF CONTENTS
View Full GitHub example:
Getting Started
Advanced
Drift Protocol v2

Tutorial: Arbitrage Bot

View Full GitHub example:

Getting Started

Advanced
