What are MEV Sandwich Attacks and Why Everyone in Crypto Should Know About Them?
Earlier this week, an anonymous bot operator using a Maximal Extractable Value (MEV) strategy reportedly made over $1 million using what is known as a sandwich attack, essentially a tool by which an operator takes over a mempool to validate transactions and seek arbitrage on giant pools of transactions.
The wallet address associated with the operator, linked to the Ethereum Name Service (ENS) domain “jaredfromsubway.eth,” gained $950,000 from the sandwich attacks on April 18, and also profited roughly $300,000 and $400,000 on April 17 and 19, on-chain data show.
According to Sealaunch, over 24-hour period from April 18 to 19, the MEV bot was responsible for 7% of all Ethereum gas fees, which it earned on $PEPE (PEPE) and $WOJAK (WOJAK), meme tokens that propelled jaredfromsubway.eth to the top spot as the largest consumer of gas over the past day and week.
Wondering why gas is so damn high?
jaredfromsubway.eth (lmao) is absolutely cleaning up by sandwich-attacking $PEPE and $WOJAK trading activity. They are #1 gas spender over the past day and week.
MEV sandwich bots on Ethereum have made $100M+ since the weekend. https://t.co/qhxyxlac20
— Matt Willemsen (@matt_willemsen) April 19, 2023
What is a sandwhich attack?
A sandwich attack occurs when an entity places their own two transactions around a victim’s transaction with the intention of manipulating the price and profiting from the user, it is referred to as a sandwich attack.
Though not immune from other proof-of-stake cryptocurrencies, Ethereum (ETH) is particularly susceptible to sandwich attacks because it ranks as the second-largest coin with 3,079,109 watchlists. It is a blockchain-based platform that enables the creation of decentralized applications through the use of smart contracts and is a significant protocol used in decentralized finance (DeFi) and non-fungible tokens (NFTs).
According to CoinMarketCap, ETH’s value dropped by 5.94% after news of the explot, with traders expressing bearish sentiment and some taking to Twitter to express their displeasure at the sandwich attack.
As of April 2023, Mev Blocker reports that MEV Bots have so far extracted more than $1.38 billion from Ethereum users who are engaged in transacting on the network, be it to mint an NFT or send wrapped ETH for a small transaction.
Several entities have recently popped up attempting to draw attention to the issue and safeguard Ethereum users from sandwich attacks. According to a report, earlier this month over 27 prominent Ethereum projects joined hands to launch MEV Blocker, a consortium that aims to prevent MEV exploits.
Filed under: Bitcoin - @ April 24, 2023 9:25 am