Arbitrage

Arbitrage is a strategy that involves buying and selling the same asset on different exchanges to take advantage of a price difference.

If a block contains multiple large transactions, a price imbalance across different exchanges can be created. For example you might be able to buy 1 ETH for 1800 USDC on Uniswap and sell 1 ETH for 2000 USDC on Sushiswap.

Arbitrage bots take advantage of those price differences and arbitrage them away by fighting for the first slot on the next block.