Explore how wrapping allows users to capitalize on arbitrage possibilities by helping clAssets maintain strong price pegs.

Wrapping on Clone Protocol offers a unique way to exchange bridged assets, specifically assets bridged to Solana through deBridge, for clAssets, opening doors to potential arbitrage opportunities. For advanced users looking to optimize their trading strategies, our "Wrapper" provides a valuable tool.

How to Use Wrapping to Arbitrage

When the price of a clAsset surpasses that of the original token it represents, it creates a potential arbitrage opportunity. Here's an example of how you can use wrapping to take advantage of an arbitrage opportunity when the price of clARB exceed the price of ARB:

  1. Purchase ARB Natively: To initiate an arbitrage trade, begin by acquiring ARB tokens directly on their native blockchain at their current market price. It's important to note that this price should be sufficiently lower than the current price of clARB, signaling an arbitrage opportunity.

  2. Use dePort: The next step is to utilize dePort, a tool that facilitates the seamless transfer of your ARB tokens to the Solana blockchain, converting them into deARB.

  3. Swap deARB for clARB: Once you have acquired deARB tokens on Solana, visit the "Wrapper" tab on Clone Liquidity to swap your deARB tokens 1:1 for clARB tokens.

  4. Sell clARB: With your clARB tokens in hand, you can now sell them into the Clone pool. If you have done everything correctly, you should receive more USDC than you started with!

NOTE: Not all cloned assets are backed by bridged assets from dePort, clSUI is partially backed by wormhole SUI. This information can be found in the the clAsset section of our docs.

By following these steps and taking into account fees and price discrepancies, advanced users can engage in arbitrage trading, contributing to the maintenance of clAsset price pegs. For more information on the hybrid collateral model, please refer to our dedicated section here.

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