Improved Arbitrage

[zyzek]

Arbitrageur balances should only increase after a cycle. Current arb assumptions don't make sense when an asset price is falling steadily.

[0xdomrom]

I think generally, the arbitrageurs should hold some amount of all three currencies, and just increase their totals of each, as in complete the whole three way cycle. There shouldn't be any other assumptions on their part. If you want to extend the logic for something that is partial arbitrage, than thats fine, but it should be separate.

There could be some setup period, where they wait for good cycles to acquire nomins (i.e. where fiat->havven->nomin or havven->fiat->nomin, is cheaper than the fiat->nom / havven->nom), but other than that they really should only have the pure arbitrage logic, i.e find cycles where they trade the whole cycle, never partially.

[zyzek]

I'm inclined not to complicate the setup period too much. Just make them buy in at the start so they have a 1:1:1 balance of currencies or so. Whether they get a slightly better price is probably not vital for fulfilling their function for the purposes of the model.

Otherwise I completely agree with your reasoning.