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How Do Arbitrageurs Profit from the Price Imbalance in a Liquidity Pool?

They buy the cheaper asset in the pool and simultaneously sell it on an external exchange for a risk-free profit until prices equalize.
Greeks.Live21.11.25

How Do Arbitrageurs Profit from the Price Imbalance in a Liquidity Pool?

Arbitrageurs monitor the price ratio in the pool versus external exchanges. If the pool's price is lower than the external market, they buy the asset cheaply from the pool.

They then immediately sell it at the higher price on the external exchange for a risk-free profit. This trading activity continues until the pool's ratio is rebalanced, bringing its internal price back in line with the external market price.

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