The maturity of the financial sector is pushing institutional centralization to the extreme. The irruption of Blockchain technology seems to be celebrated as a way to evade the barriers and asymmetry of a system increasingly biased. Decentralized Finance has inaugurated a new stage where capital trading has a whole new meaning. Not only has it originated new crypto assets, but it has also bred the development of new protocols and markets that establish an accessible, fair and transparent financial system. The detachment from conventional finance lies in disintermediation, automation and decentralization. Automated Market Makers make up the paradigm in which Decentralized Exchanges operate. Specifically, Uniswap served as the precursor protocol of this model satisfying the supply and demand of liquidity providers and traders through automatic platforms of reserves or Liquidity Pools. By combining these elements with the Constant Function Market Maker configuration, Uniswap AMM achieves an optimal trading solution in decentralized markets while maximizing capital efficiency. In parallel to Uniswap, numerous facilities are settled in the environment for cryptoasset trading. This ends up incubating an ecosystem that promotes symbiosis and interoperability resulting in fluctuation of values, being subjected to considerable risk. Nevertheless, this context is the right place for High Frequency Trading, that makes use of strategies such as arbitrage. This project will culminate in the proposal of a tool that can offer utility in executing these operations.
What do we really know about Blockchain? Talking about the Bitcoin revolution without really knowing what is happening behind this innovation is common. Truth is that we cannot separate the financial phenomenon from the technology that supports it. Ethereum is the network that has given birth to the well-renowned system of Decentralized Finance. The creation of a secure, democratic and efficient environment for decentralized markets has only been possible thanks to the automation of Smart Contracts. In the face of so much transformation, we must be aware of the risks, limitations and weaknesses of Blockchain technologies, especially in the early stages of a proposal that has not yet reached its maturity. We will go through the fundamental vectors of innovation, from the foundations of Blockchain architecture to Smart Contracts in Ethereum, presenting case studies that allow us to conceive the value of this innovation in a pragmatic way. The Decentralized Finance ecosystem has fostered High Frequency Trading that exploits with the high volatility of the securities traded in these markets. For the agents involved in these activities, it is a challenge to keep up with price information from the different platforms of the framework. We will conclude the project with the development of a Price Oracle, an application that will provide reliable, immediate, updated and accurate information of prices disposed in different protocols of the environment for numerous assets. The utility offered by this API could potentially be integrated with strategies such as arbitrage in DeFi.