Risk Management & Position Sizing
Position sizing caps at 5% per trade. Circuit breakers halt on drawdown gas spikes or pool anomalies.
DexArb uses Kelly Criterion-inspired position sizing. The formula weighs expected profit, win rate, and maximum acceptable drawdown to prevent over-concentration in any single trade.
Maximum position: 5% of total portfolio per trade. Even high-confidence opportunities get sized conservatively because smart contract risk (exploits, rug pulls, oracle manipulation) cannot be fully modeled.
Gas cost optimization prevents death by a thousand cuts. DexArb batches multiple small opportunities into single multicall transactions, reducing per-trade gas overhead by 40-60%.
Circuit breakers halt all trading if: portfolio drawdown exceeds 10% in 24 hours, gas prices spike above 200 gwei, or a monitored pool loses more than 30% TVL suddenly. Manual review required to restart.