Build a Production-Ready Flash Loan Arbitrage Bot on Polygon Objective: Develop a fully autonomous, profitable arbitrage trading bot that operates exclusively on the Polygon network, utilizing flash loans for all trading capital. The bot must be production-ready, robust, and designed with security and efficiency in mind.

🎯 Project Goal The primary goal is to identify and execute profitable arbitrage opportunities between various Decentralized Exchanges (DEXs) on the Polygon network, using flash loans from protocols like Aave. The bot should be capable of independent operation, from scanning for opportunities to executing bundled transactions, and managing repayments within a single atomic transaction.

🏗️ Architecture The bot will consist of two main components:

On-Chain Smart Contracts (Solidity):

A core ArbitrageExecutor.sol contract responsible for:

Receiving flash loans from providers (e.g., Aave).

Executing multiple swap operations across different DEXs within the same transaction.

Repaying the flash loan along with its fee (premium).

Implementing emergency withdrawal functions for accidental token transfers or profits.

The contract must implement the necessary callback interface for the chosen flash loan provider (e.g., IAaveFlashLoanCallback).

It should be gas-efficient and secure against common Solidity vulnerabilities (reentrancy, integer overflows, etc.).

Off-Chain Services (Node.js with ethers.js or Python with web3.py - Developer's Choice):

Price Scanner:

Continuously monitor real-time prices for selected token pairs across multiple DEXs (e.g., Uniswap V3, QuickSwap, SushiSwap) on Polygon.

Directly query DEX smart contracts (e.g., getAmountsOut or quoteExactInputSingle functions on routers/quoters) for the most accurate, real-time price data.

Implement an arbitrage path-finding algorithm (e.g., graph traversal to detect negative cycles) to identify profitable trade sequences.

Calculate the net profitability of each opportunity, factoring in flash loan fees, DEX swap fees, and estimated Polygon gas costs.

Filter opportunities based on a configurable minimum profit threshold (e.g., MIN_PROFIT_THRESHOLD_USD).

Transaction Executor:

Upon detecting a profitable opportunity, construct the raw transaction data to call the executeFlashLoan function on the deployed ArbitrageExecutor.sol contract.

Dynamically estimate optimal gas prices (base fee + priority fee for EIP-1559 on Polygon).

Sign the transaction using a private key (stored securely via environment variables).

Submit the signed transaction to the Polygon network via a reliable RPC endpoint.

Implement robust retry logic with exponential backoff for failed transaction submissions.

(Optional but highly desired) Integrate with private transaction relays or MEV-aware RPCs on Polygon to mitigate front-running risks.

⚙️ Technical Requirements & Deliverables Smart Contract Development:

Solidity (latest stable version).

Hardhat for development, testing, and deployment.

Comprehensive unit and integration tests (using a Hardhat local fork of Polygon mainnet).

Deployment scripts for Polygon Mumbai (testnet) and Polygon Mainnet.

Clear and well-commented code.

Off-Chain Development:

Node.js (ethers.js) or Python (web3.py).

Modular and clean code structure.

Robust error handling and logging for all operations.

Configuration via .env files for sensitive data and network parameters.

Core Functionality:

Ability to dynamically identify profitable arbitrage paths involving 2-3 DEXs.

Atomic execution of flash loan acquisition, multi-DEX swaps, and flash loan repayment within a single transaction.

Accurate profit calculation, accounting for all fees.

Configuration:

.env file with:

POLYGON_MAINNET_RPC_URL, POLYGON_MUMBAI_RPC_URL

PRIVATE_KEY (for deployer and bot executor)

POLYGONSCAN_API_KEY (for contract verification)

Addresses for target DEXs (Routers/Factories for Uniswap V2/V3, QuickSwap, SushiSwap etc.)

AAVE_POOL_ADDRESSES_PROVIDER address.

MIN_PROFIT_THRESHOLD_USD

GAS_LIMIT_BUFFER_PERCENTAGE (for dynamic gas limit adjustment)

Documentation:

A comprehensive README.md (similar in scope to the one I'm using now) detailing setup, architecture, usage, security, and monitoring.

🔒 Security & Best Practices Smart Contract Audits: Assume external audit will be performed. Write code with auditability in mind.

Private Key Management: Emphasize secure storage (environment variables, no hardcoding).

Slippage Control: Implement mechanisms within the smart contract to set slippage tolerance for swaps.

MEV Protection: Prioritize strategies to reduce vulnerability to front-running (e.g., private transactions, careful gas management).

Access Control: Implement onlyOwner or similar modifiers for sensitive contract functions.

📊 Monitoring & Alerts Basic logging for successful/failed transactions, profits, and errors.

Suggestions for integrating external monitoring tools (e.g., Polygonscan, Sentry, Telegram alerts).

✅ Deliverables Summary Complete Hardhat project with ArbitrageExecutor.sol contract and tests.

Deployment scripts.

Off-chain Price Scanner service.

Off-chain Transaction Executor service.

.env configuration examples.

Detailed README.md for full project setup and operation.

Begin development by outlining the ArbitrageExecutor.sol contract structure and then proceed to the off-chain components. Ensure modularity and testability throughout.

Runbook: Monitoring Bot and Execution

Prerequisites:

• Node.js 18+
• Funded wallet on Polygon/Mumbai with minimal MATIC for gas (only keeper tx; flash loan principal is borrowed)
• Deployed ArbitrageExecutor contract address

1. Install dependencies and compile:

npm install
npm run compile

2. Deploy the contract (examples):

# Set your RPC and PRIVATE_KEY in .env first
npm run deploy:mumbai
# or
npm run deploy:polygon

3. Configure environment for the bot. Create a .env file with at least:

# RPC and signer
RPC_URL=https://polygon-rpc.com                     # Polygon mainnet RPC
PRIVATE_KEY=0xabc...                                # bot executor key

# Contract
EXECUTOR_ADDRESS=0xYourDeployedExecutor             # paste from deploy output

# Assets and routers (Polygon mainnet examples)
TOKEN_A=0x2791Bca1f2de4661ED88A30C99A7a9449Aa84174  # USDC (6 decimals)
TOKEN_B=0x7ceB23fD6bC0adD59E62ac25578270cFf1b9f619  # WETH
TOKEN_C=0x0000000000000000000000000000000000001010  # WMATIC (example)
DEX1_ROUTER=0xa5E0829caCEd8fFDD4De3c43696c57F7D7A678ff  # QuickSwap V2 Router
DEX2_ROUTER=0x1b02da8Cb0d097eb8D57A175B88c7D8b47997506  # SushiSwap V2 Router
DEX3_ROUTER=0xF8aB5A2b98E2aAEF122B972eAFa2b6f05B5D7BBd  # Uniswap V2 Router (example)

# Strategy
FLASH_AMOUNT=1000000000        # 1,000 USDC (6 decimals)
MIN_PROFIT_WEI=5000000         # Minimum net profit in USDC wei
SLIPPAGE_BPS=50                # 0.50% slippage guard (optional; defaults to on-chain)
AAVE_FLASH_FEE_BPS=5           # 0.05% Aave simple flash loan fee
CHECK_INTERVAL_MS=4000
ARB_MODE=auto                  # two | three | auto

# Optional gas awareness and controls
WNATIVE=0x0000000000000000000000000000000000001010   # WMATIC; if omitted, bot tries dex1.WETH()
GAS_LIMIT_TWO=650000                                   # static gas cap for 2-leg (estimation-free)
GAS_LIMIT_THREE=900000                                 # static gas cap for 3-leg
MAX_FEE_GWEI=150                                       # cap EIP-1559 maxFeePerGas
MAX_PRIORITY_FEE_GWEI=2                                # cap EIP-1559 maxPriorityFeePerGas
DRY_RUN=true                                           # if set, bot will not submit txs

# Aave V3 PoolAddressesProvider (Polygon mainnet)
AAVE_POOL_ADDRESSES_PROVIDER=0xa97684ead0e402dC232d5A977953DF7ECBaB3CDb

Notes:

• Ensure TOKEN_A, TOKEN_B, DEX1_ROUTER, and DEX2_ROUTER match the network you run on.
• For triangle arbitrage also set TOKEN_C and DEX3_ROUTER.
• Routers must be V2-style with getAmountsOut and swapExactTokensForTokens.
• The contract expects parameters encoded as (uint8 kind, bytes payload), where kind=0 is two-leg and kind=1 is three-leg. The bot handles this encoding for you.
• The contract uses Aave V3 Simple Flash Loan via PoolAddressesProvider set at deployment.

4. Start the bot:

npm run bot

What it does:

• Polls price quotes from two V2 routers for path [TOKEN_A -> TOKEN_B] then [TOKEN_B -> TOKEN_A] (two-leg), and optionally from three routers for triangle path [TOKEN_A -> TOKEN_B] -> [TOKEN_B -> TOKEN_C] -> [TOKEN_C -> TOKEN_A].
• Chooses the more profitable mode (two-leg vs triangle) when ARB_MODE=auto, or forces one with ARB_MODE=two|three.
• Estimates gas cost using capped EIP-1559 gas and values it into TOKEN_A via WNATIVE->TOKEN_A quotes; triggers only if (net after flash fee minus gas) >= MIN_PROFIT_WEI.
• If conditions meet and DRY_RUN is not set, it calls executeFlashLoan on ArbitrageExecutor with encoded parameters and EIP-1559 gas respecting caps.
• Contract borrows via Aave, does swaps atomically, repays, and retains profit on the contract, withdrawable via withdrawToken.

Troubleshooting:

• If compilation fails with stack-too-deep, we enabled viaIR: true in hardhat.config.ts.
• Ensure your RPC URL is healthy and the signer has MATIC for gas.
• On testnets, token liquidity may be thin; use well-paired tokens.
• If the bot never executes, verify WNATIVE resolves and your MIN_PROFIT_WEI accounts for gas in TOKEN_A. Use DRY_RUN=true to observe quotes and profit minus gas before live execution.