# sNECT Arbitrage Opportunities

### **Scenario 1: sNECT Protocol Price < DEX Price**

* Steps:
  * Purchase NECT from a DEX and deposit it into the LSP to mint sNECT shares.
  * Sell the sNECT shares on a DEX for a higher price.
  * Example:

    * If NECT costs $0.95 on a DEX and an arbitrageur mints sNECT shares with it, then sells those sNECT shares for $1.00, they effectively secure a $0.05 profit per NECT through this arbitrage opportunity.

### **Scenario 2: DEX Price < sNECT Protocol Price**

* Steps:
  * Purchase sNECT on a DEX at a discount.
  * Redeem sNECT shares for underlying collateral (pro-rata or preferred tokens).
  * Sell the redeemed collateral on a DEX for profit.
  * Example:
    * If an arbitrageur purchases sNECT for $0.90 and redeems it for collateral worth $1.00, selling the collateral allows them to secure a $0.10 profit per sNECT share.

**Example of a Redemption:**

* Scenario: NECT is trading at $0.95, and Alice redeems 10,000 NECT for collateral.
  * The targeted Den contains 10 ETH, each worth $1,000.
  * Redeeming 10,000 NECT gives Alice 10 ETH.
  * Selling the ETH at market value ($10,000) results in a $500 profit, incentivizing redemptions and supporting the NECT peg.


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