An 'unlucky' MEV bot took out a $12 million loan but earned only $20. This incident highlights the risks and complexities involved in MEV attacks.
How a sandwich attack works
A sandwich attack occurs when an attacker 'sandwiches' a victim's transaction between their own two transactions to manipulate the price and profit. The victim's transaction is first sent to the mempool, where it waits to be added to the next block. In the meantime, the attacker sets one transaction with a high gas fee to ensure it is processed first, and another transaction with a lower gas fee to ensure it is processed after the victim's transaction. The attacker profits by buying the victim's tokens at a lower price and then selling them within the same block, pocketing the difference minus gas fees.
Details of the MEV bot's operation
On September 5th, blockchain analytics platform Arkham Intelligence reported that a bot took out a $11.97 million loan in Wrapped Ether (WETH) to execute a sandwich attack on a user attempting to swap about $5,000 worth of Shuffle (SHFL) tokens. According to Arkham, the bot performed 14 transactions, including lending and borrowing around $700,000 in USDC and WETH through DeFi protocols Aave and Uniswap. All transactions were confirmed in a single block, taking about 12 seconds to complete. However, after paying gas fees, the bot earned only about $20.
Previous successes of MEV bots
Despite this bot's failure, MEV bots have often been profitable for their operators. In April 2023, the notorious MEV bot operator jaredfromsubway earned well over $1 million in a single week by conducting sandwich attacks on buyers and sellers of the memecoins PEPE and WOJAK.
Incidents like this illustrate both the potential for significant profits and the high risks associated with MEV attacks. Operators need to be prepared for possible losses and carefully calculate their actions.
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