A test to demonstrate an arb opportunity we discovered

1st-arb-demo.ts

it.only("arbitrage BTC/USD with $0.01 strategy", async () => {
  const ONE_CENT = { amount: 1n, currency: WalletCurrency.Usd } as UsdPaymentAmount
  const ONE_SAT = { amount: 1n, currency: WalletCurrency.Btc } as BtcPaymentAmount

  const getUsdForBtcEquivalent = async (
    btcAmount: BtcPaymentAmount,
  ): Promise<CurrencyBaseAmount> => {
    // console.log({ btcAmount })
    const lnInvoice = await Wallets.addInvoiceForSelf({
      walletId: walletIdB,
      amount: toSats(btcAmount.amount),
    })
    if (lnInvoice instanceof Error) throw lnInvoice

    const beforeUsd = await getBalanceHelper(walletIdUsdB)
    const result = await Payments.payInvoiceByWalletId({
      paymentRequest: lnInvoice.paymentRequest,
      memo: null,
      senderWalletId: walletIdUsdB,
      senderAccount: accountB,
    })
    if (result instanceof Error) throw result
    const afterUsd = await getBalanceHelper(walletIdUsdB)
    const diff = (beforeUsd - afterUsd) as CurrencyBaseAmount
    // console.log({ beforeUsd, afterUsd, diff })
    return diff
  }

  const midPriceRatio = await getMidPriceRatio(usdHedgeEnabled)
  if (midPriceRatio instanceof Error) throw midPriceRatio
  const startingBtcAmount = midPriceRatio.convertFromUsd(ONE_CENT)
  console.log({ startingBtcAmount })

  // Validate btc starting amount for max btc discovery
  let maxBtcAmountToEarn = startingBtcAmount
  let diff = 2 as CurrencyBaseAmount
  while (diff > 1) {
    diff = await getUsdForBtcEquivalent(maxBtcAmountToEarn)
    if (diff > 1) {
      maxBtcAmountToEarn = calc.sub(maxBtcAmountToEarn, ONE_SAT)
    }
  }
  expect(diff).toEqual(1)
  console.log("Start:", { maxBtcAmountToEarn })

  // Discover max BTC amount to buy for $0.01
  while (diff === 1) {
    maxBtcAmountToEarn = calc.add(maxBtcAmountToEarn, ONE_SAT)
    diff = await getUsdForBtcEquivalent(maxBtcAmountToEarn)
  }
  maxBtcAmountToEarn = calc.sub(maxBtcAmountToEarn, ONE_SAT)
  console.log("Discovered:", { maxBtcAmountToEarn })

  // Validate btc starting amount for min btc discovery
  let minBtcAmountToSpend = startingBtcAmount
  let paid: Error | PaymentSendStatus = PaymentSendStatus.Success
  while (!(paid instanceof ZeroAmountForUsdRecipientError)) {
    paid = await Payments.intraledgerPaymentSendWalletId({
      recipientWalletId: walletIdUsdB,
      memo: null,
      amount: toSats(minBtcAmountToSpend.amount),
      senderWalletId: walletIdB,
      senderAccount: accountB,
    })
    if (paid instanceof Error && !(paid instanceof ZeroAmountForUsdRecipientError)) {
      throw paid
    }
    // console.log(paid, minBtcAmountToSpend)

    if (!(paid instanceof ZeroAmountForUsdRecipientError)) {
      minBtcAmountToSpend = calc.sub(minBtcAmountToSpend, ONE_SAT)
    }
  }
  console.log("Start:", { minBtcAmountToSpend })

  // Discover min BTC amount to sell for $0.01
  while (paid instanceof ZeroAmountForUsdRecipientError) {
    minBtcAmountToSpend = calc.add(minBtcAmountToSpend, ONE_SAT)
    paid = await Payments.intraledgerPaymentSendWalletId({
      recipientWalletId: walletIdUsdB,
      memo: null,
      amount: toSats(minBtcAmountToSpend.amount),
      senderWalletId: walletIdB,
      senderAccount: accountB,
    })
    if (paid instanceof Error && !(paid instanceof ZeroAmountForUsdRecipientError)) {
      throw paid
    }
    console.log(paid, minBtcAmountToSpend)
  }
  console.log("Discovered:", { minBtcAmountToSpend })

  console.log({
    maxBtcAmountToEarn,
    minBtcAmountToSpend,
    arb: maxBtcAmountToEarn.amount - minBtcAmountToSpend.amount,
  })

  // Execute arbitrage
  const arbBeforeBtc = await getBalanceHelper(walletIdB)
  const arbBeforeUsd = await getBalanceHelper(walletIdUsdB)

  // Step 1: Create invoice from BTC Wallet
  const lnInvoice = await Wallets.addInvoiceForSelf({
    walletId: walletIdB,
    amount: toSats(maxBtcAmountToEarn.amount),
  })
  if (lnInvoice instanceof Error) throw lnInvoice

  // Step 2: Pay invoice from USD wallet at favourable rate
  await Payments.payInvoiceByWalletId({
    paymentRequest: lnInvoice.paymentRequest,
    memo: null,
    senderWalletId: walletIdUsdB,
    senderAccount: accountB,
  })

  // Step 3: Replenish USD from BTC wallet at lower rate
  await Payments.intraledgerPaymentSendWalletId({
    recipientWalletId: walletIdUsdB,
    memo: null,
    amount: toSats(minBtcAmountToSpend.amount),
    senderWalletId: walletIdB,
    senderAccount: accountB,
  })
  if (paid instanceof Error && !(paid instanceof ZeroAmountForUsdRecipientError)) {
    throw paid
  }

  const arbAfterBtc = await getBalanceHelper(walletIdB)
  const arbAfterUsd = await getBalanceHelper(walletIdUsdB)
  const diffBtc = arbAfterBtc - arbBeforeBtc
  const diffUsd = arbAfterUsd - arbBeforeUsd

  console.log({ diffBtc, diffUsd })
  console.log({
    arbPercentage: `${Math.round(
      (diffBtc / Number(minBtcAmountToSpend.amount)) * 100,
    )}%`,
  })

  expect(diffBtc).toBeLessThanOrEqual(0)
  expect(diffUsd).toBeLessThanOrEqual(0)
})