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Keeping it Simple | Ep. 11: The Evolution of Finance... What Does the Future HODL?

Keeping it Simple with Simplify Asset Management

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How Can That Arbitrage Condition Go Wrong?

There are a number of dimensions of risk here. executing this arbitrage could be costly in terms of the transaction fees. This is entering into, effectively a basian contract that says, i'm going to buy this from you, conditional on my being able to sell it over here. And ah, it might be that you do this trade and then someone else jumps ahead at the same time - which is known as front running. Given that everything's public, it's perfectly acceptable to do this. So you could easily be front run also.

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