Second Thoughts: How 1-second subslots transform CEX-DEX Arbitrage on Ethereum

ArXiv ID: 2601.00738 “View on arXiv”

Authors: Aleksei Adadurov, Sergey Barseghyan, Anton Chtepine, Antero Eloranta, Andrei Sebyakin, Arsenii Valitov

Abstract

This paper examines the impact of reducing Ethereum slot time on decentralized exchange activity, with a focus on CEX-DEX arbitrage behavior. We develop a trading model where the agent’s DEX transaction is not guaranteed to land, and the agent explicitly accounts for this execution risk when deciding whether to pursue arbitrage opportunities. We compare agent behavior under Ethereum’s default 12-second slot time environment with a faster regime that offers 1-second subslot execution. The simulations, calibrated to Binance and Uniswap v3 data from July to September 2025, show that faster slot times increase arbitrage transaction count by 535% and trading volume by 203% on average. The increase in CEX-DEX arbitrage activity under 1-second subslots is driven by the reduction in variance of both successful and failed trade outcomes, increasing the risk-adjusted returns and making CEX-DEX arbitrage more appealing.

Keywords: Ethereum Slot Time, Decentralized Exchange (DEX), CEX-DEX Arbitrage, Execution Risk, Trading Volume Analysis, Cryptocurrency

Complexity vs Empirical Score

  • Math Complexity: 6.5/10
  • Empirical Rigor: 7.0/10
  • Quadrant: Holy Grail
  • Why: The paper employs a stochastic trading model with execution risk and parameterized agent utility (risk-adjusted returns), involving moderate mathematical complexity. Empirical rigor is high due to detailed calibration using real-world exchange data (Binance, Uniswap v3) and quantitative simulation results (535% transaction increase, 203% volume increase).
  flowchart TD
    A["Research Goal:<br>How does reducing Ethereum slot time<br>impact CEX-DEX arbitrage?"] --> B["Modeling Methodology:<br>Trading Agent with<br>Execution Risk Framework"]
    B --> C["Data Inputs:<br>Calibrated to Binance &<br>Uniswap v3 (Jul-Sep 2025)"]
    C --> D["Computational Process:<br>Simulate Behavior under<br>12s vs 1s Slot Times"]
    D --> E["Key Finding 1:<br>535% Increase in<br>Arbitrage Transactions"]
    D --> F["Key Finding 2:<br>203% Increase in<br>Trading Volume"]
    D --> G["Key Finding 3:<br>Reduced Execution Variance<br>Makes Arbitrage More Appealing"]