A flash loan arbitrage bot discovers lucrative price differences between decentralised exchanges (DEXS) by constantly monitoring real-time token values on different DEXS, like as Uniswap, Sushiswap, and PancakeSwap. It employs clever algorithms to look for chances in which a token is valued cheaper on one exchange but higher on another. When it discovers a lucrative gap, one that covers gas fees while leaving a margin, it immediately gets a flash loan (often from protocols such as Aave or DyDx), buys the asset on the lower-cost exchange, sells it on the higher-priced one, and repays the loan in a single transaction. If any stage fails, the transaction is automatically reversed to avoid losses.