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06/09/24
35
MEV Bot’s $12 Million Flash Loan Yields Just $20 Profit: The Risks of Sandwich Attacks
In a peculiar turn of events, a Maximum Extractable Value (MEV) bot engaged in an ambitious operation that involved a flash loan of approximately $12 million, only to realize a meager profit of around $20 — barely enough to purchase a sandwich. Reportedly, the bot borrowed nearly $11.97 million in Wrapped Ether (WETH) to execute a sandwich attack on a user attempting to swap around $5,000 worth of Shuffle (SHFL) tokens.
The bot executed 14 transactions throughout the duration of its maneuver, navigating lending, borrowing, and repaying about $700,000 in USDC and WETH across decentralized finance platforms Aave and Uniswap. Despite the complexity and scale of the operation, which was completed in a single block within roughly 12 seconds, the financial return was disappointingly slim after accounting for associated gas fees.
A sandwich attack involves an attacker placing their transactions strategically around a victim’s transaction in order to manipulate the price of the target asset for profit. In this instance, once a victim’s transaction enters the mempool – waiting to be processed in the next block — the attacker submits a transaction with a high gas fee to ensure priority, followed by another transaction at a lower fee. This sequence allows the attacker to purchase tokens at below-market prices before selling them immediately for profit.
While this specific MEV bot did not achieve significant profitability, many others have seen greater success with similar tactics. For instance, in April 2023, a notable MEV bot operator reportedly earned over $1 million in a week by conducting a series of sandwich attacks on various memecoins. This incident underscores the volatile and often unpredictable nature of profits within the realm of decentralized finance, where strategies can lead to both substantial gains and surprising losses.
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