Uniswap ETH to Tokens to ETH swap function

Question

UniswapV2Router02.sol has 2 interesting functions which i'd love to combine swapExactETHForTokens and swapExactTokensForETH. Basic idea is arbitrage from ETH to tokens and back to ETH. As far I understand swapExactETHForTokens deposits ETH and performs swaps and swapExactTokensForETH performs swaps and withdraws ETH. Is it possible to implement my idea by simply adding withdrawal code to the end of swapExactETHForTokens?

function swapExactETHForTokensForETH(uint amountOutMin, address[] calldata path, address to, uint deadline)
    external
    virtual
    override
    payable
    ensure(deadline)
    returns (uint[] memory amounts)
{
    require(path[0] == WETH, 'UniswapV2Router: INVALID_PATH');
    amounts = UniswapV2Library.getAmountsOut(factory, msg.value, path);
    require(amounts[amounts.length - 1] >= amountOutMin, 'UniswapV2Router: INSUFFICIENT_OUTPUT_AMOUNT');
    IWETH(WETH).deposit{value: amounts[0]}();
    assert(IWETH(WETH).transfer(UniswapV2Library.pairFor(factory, path[0], path[1]), amounts[0]));
    _swap(amounts, path, to);

    // Adding code from swapExactETHForTokens here
    IWETH(WETH).withdraw(amounts[amounts.length - 1]);
    TransferHelper.safeTransferETH(to, amounts[amounts.length - 1]);
}

Answer 1

Technically speaking what you propose is possible. Perhaps I would leave the two functions swapExactETHForTokens & swapExactTokensForETH as they are, and I would create a new function to call them in a single transaction in order to adjust the function parameters as needed.

However, if your goal is to do arbitrage in order to make some profit, you should be leveraging a price discrepancy across different exchanges. If you do the arbitrage within the same exchange, you won't get any profit unless the time period between the swaps is long enough to affect the prices (luckily increasing, otherwise you will lose value), but that would be more like a long term investment rather than arbitrage, and apparently, you want to do the two swaps in the same transaction.

It is nowadays a common practise to use flashloan pattern for arbitrage: basic idea is to listen for price discrepancies between different decentralized exchanges, and then do all these steps in a single transaction:

1. Borrow an amount X of tokens at DeFi platform D
2. Exchange X amount of tokens at DEX A (e.g.: Uniswap)
3. Exchange X amount of tokens at DEX B (e.g.: Kyber)
4. Return the loan at DeFi platform D

This way, you don't need to have ethers or tokens in advance to perform all these operations. The price discrepancy between A & B must be higher than the fees you pay for the loan and swaps if you want to have any profit.