Arbitraging the AMM

Like all other AMMs, Carmine relies on arbitrageurs to keep the price competitive. A core design goal of the AMM was to provide vanilla options that are easily arbitrageable against ones you can buy on exchanges like Deribit or Binance Options.

Arbitraging is currently often very profitable, because there's a big overhang of demand to buy options (which pushes the price – often expressed as implied volatility – up) versus the demand to sell options (which pushes the price down). We expect this to continue for the foreseeable future.

We are providing CARM token grants for developers of an open-source arbitrage bot that can monitor arbitrage possibilities on Carmine and Deribit and/or other centralized exchanges that offer options.