Research Lead Assignment - C11 Labs

Overview

This repository showcases my solutions to selected challenges from the C11 Labs Research Lead Assignment. The tasks focus on algorithmic trading strategies, spanning topics like arbitrage detection, liquidity pool mechanics, and market-making algorithms. The project highlights my structured approach to solving complex problems in decentralized finance (DeFi).

Challenges Solved

Challenge 2: Arbitrage in Metronome 1.0

• Focus: Analyzed arbitrage opportunities within the Metronome 1.0 cryptocurrency ecosystem.
• Details: Explored the protocol’s design and derived mathematical conditions for profitable arbitrage.
• Outcome: Identified strategies to exploit price inefficiencies for optimal returns.

Challenge 3: DeFi Liquidity Pool Mechanics

• Focus: Examined reserve calculations and swap mechanics within a DeFi liquidity pool.
• Details: Modeled price determination and arbitrage scenarios using mathematical frameworks.
• Outcome: Demonstrated the impact of trades on pool reserves and price slippage.

Challenge 5: Market-Making Algorithm

• Focus: Designed a market-making algorithm leveraging predictive fair value estimation.
• Details: Outlined methods for generating optimal quotes, managing risk, and simulating performance.
• Outcome: Assessed the algorithm’s strengths and limitations, with potential for machine learning optimization.

Document Highlights

The detailed solutions are available in Solutions.pdf, which includes:

• Methodologies: A step-by-step explanation of the approaches used for each challenge.
• Assumptions and Testing: Documentation of the thought process, assumptions, and validation methods.
• Simulations: Visualizations and results to support the findings.

Learning Outcomes

This project enabled me to:

• Develop a deep understanding of DeFi mechanics and trading strategies.
• Apply mathematical modeling to real-world financial systems.
• Explore the use of simulations and data-driven methods for strategy optimization.

Running the Code

To replicate the results:

1. Install dependencies:

   ./installation.sh

2. Navigate to the desired challenge folder:

   cd exerciseXXX

3. Run the main script using Poetry:

   poetry run python src/main.py

Feedback and Contributions

Feel free to explore the repository and reach out with any feedback or questions!