Burak Öz, Christof Ferreira Torres, Christoph Schlegel, Bruno Mazorra, Jonas Gebele, Filip Rezabek, Florian Matthes
Decentralized finance (DeFi) markets are fragmented across block-chains, creating price differences that arbitrage helps eliminate. Today, much of this price alignment occurs against centralized exchanges, whose deep liquidity and fast execution make them dominant venues for price discovery. As trading activity moves on-chain, cross-chain arbitrage between decentralized exchanges is becoming increasingly important. Yet despite its relevance to DeFi, prior work has largely been limited to hypothetical opportunity analyses and conceptual overviews. We conduct a year-long empirical study of cross-chain arbitrage from September 2023 to August 2024 across nine blockchains and identify 242,535 executed arbitrages totaling USD 868.64 million in volume. Activity grows by 5.5x over the study period and surges after the Dencun upgrade on March 13, 2024. Most trades rely on pre-positioned inventory (66.96%) and settle in a median of 9s, whereas bridge-based arbitrages take 242s, highlighting the latency cost of today's bridges. Market concentration is substantial: the five largest addresses execute more than half of all trades, and one address alone captures nearly 40% of daily volume post-Dencun. Taken together, these patterns suggest that cross-chain arbitrage can encourage vertical integration, concentrating sequencing infrastructure and economic power, thereby increasing censorship and consensus security risks. Decentralizing block building and lowering entry barriers are therefore important mitigation directions.