A bot operating on the Solana blockchain, specializing in Maximum Extractable Value (MEV), successfully earned a remarkable $1.7 million from a dubious transaction. This transaction involved a trader buying 900 cryptocurrencies in a highly inefficient manner, specifically focusing on the memecoin Dogwifhat (WIF).
The MEV bot, operated by 2fast, carried out a strategic exchange of 703 Solana. According to data from Solscan, the bot initially acquired 490,000 WIF and then traded the same amount of WIF for 19,035 SOL within the same trade sequence, resulting in a profit of $1.73 million. MEV bots are programmed to scan blockchain networks for lucrative trade opportunities and execute these trades automatically.
This bot utilizes technology created by Jito Labs, a subsidiary of Solana's liquid staking protocol Jito. Its functionality is similar to a flashbot in the Ethereum network, enabling it to seek out the highest possible extractable value and bid for inclusion in a set of transactions.
The opportunity for this quick profit arose from a large-scale trade by an individual (identified as zeroxtrading.sol), who bought an astonishing $8.9 million worth of memecoin in a single transaction. The excessive bid was placed in markets with low liquidity, leading to the filling of orders at around $3 per WIF token – a rate about 1,400% higher than the token's actual value at the time. Following the trade, the value plummeted, resulting in an immediate 92% loss of capital for the traders involved.
In a January 11th post, it was explained that backdating is a less damaging practice for blockchain networks. It focuses on capturing arbitrage opportunities from a large volume of incorrectly priced transactions without impacting the original transaction itself.
This is in contrast to the more harmful "sandwich" attack, where an initial order is placed between two trades, forcing a repricing of the initial bid. Such tactics often adversely affect the initial transaction price, leading to financial losses for blockchain users.
