BOTS SANDWICH ATTACKS AND ARBITRAGE: CRYPTO TRADING BOT EARNS $34 MILLION IN 3 MONTHS
Once upon a time, there was a crypto trading bot – The cryptocurrency market is known for its unpredictability and volatility, which sometimes leads to the unfortunate losses of many traders. On the other hand, others manage to succeed with bold bets. This is the case for Jaredfromsubway.eth, who, in just 3 months, amassed an impressive $34 million due to the arbitrage of his bot and the so-called sandwich attacks.
THE BOT THAT WANTED IT ALL WITH SANDWICH ATTACKS
No joke! Jaredfromsubway.eth, named as a nod to Subway’s former spokesperson jailed for 15 years for sex crimes, created the bot in February. In no time, it became one of the most active players on Ethereum, with its transactions now appearing in over 60% of blocks. More specifically, in just 3 months, his bot became a true legend, gobbling up $34 million.
The bot’s success is partly due to the use of a technique called “sandwich attacks.” This method involves grouping a pending transaction with two other transactions (MEV) and submitting them to a blockchain validator for processing. The two added transactions aim to manipulate the market to make the original transaction less profitable and increase the attacker’s profits. MEV, a practice that seeks to maximize profits in a block by optimally organizing transactions, is the weapon of choice for sandwich attacks.
ARBITRAGING DEFI: A GAME WON IN ADVANCE FOR THIS CRYPTO TRADING BOT
In addition to these crafty sandwich attacks, our colleagues at The Block also explain that Jaredfromsubway.eth earned part of his income by using his crypto gains to exploit arbitrage opportunities in the DeFi token markets. DeFi arbitrage involves taking advantage of price differences between various decentralized exchanges to make profits. Jared’s bot was able to quickly execute transactions on multiple exchanges simultaneously to capture these arbitrage opportunities. Thus, it was both greedy and clever.
With such momentum, this crypto trading bot could not go unnoticed by the competition, which was challenged, as well as by the community. A total of 238,000 attacks with over 106,000 victims accounted for $40 million in winnings and $6 million in transaction fees.
MEV bots wreak havoc on Ethereum. Just recently, LIDO hit the jackpot with 47 validated transactions resulting in a reward of 689 ETH. However, these bots also have their weaknesses, and things sometimes go sour. This is evidenced by the recent discovery of a flaw in the MEV-Boost code, which allowed the theft of $25 million from crypto trading bots.
**THE IMPACT OF TRADING BOTS ON THE CRYPTO MARKET AND POTENTIAL REGULATORY CONCERNS**
As trading bots like Jaredfromsubway.eth’s continue to profit from MEV strategies and DeFi arbitrage, their impact on the cryptocurrency market raises several questions. Critics argue that such tactics can negatively affect market fairness, liquidity, and transparency – ultimately undermining investor confidence. Additionally, the possibility of market manipulation resulting from sandwich attacks might draw regulatory scrutiny.
**FUTURE DEVELOPMENTS: INCREASING COMPETITION AND THE NEED FOR INNOVATION**
As the use of crypto trading bots grows, so does the competition among them. In order to maintain a competitive edge, bot creators need to continuously innovate and refine their strategies. New trading algorithms, data analysis techniques, and risk management approaches will be crucial for bots to succeed in an increasingly crowded market.
**THE ETHICAL DEBATE: WEIGHING THE PROFITS AGAINST FAIR MARKET PRACTICES**
The impressive gains made by bots like Jaredfromsubway.eth’s lead to an ethical debate surrounding the use of such trading techniques. While these bots can make substantial profits for their creators, they might also contribute to unfair market practices that could harm other traders. As a result, the crypto community may need to consider establishing guidelines or regulations that ensure a level playing field for all market participants.
**CONCLUSION: ADAPTING TO THE CHANGING LANDSCAPE OF CRYPTO TRADING**
The success of crypto trading bots like Jaredfromsubway.eth’s showcases the potential for massive profits through advanced trading techniques. However, their impact on the cryptocurrency market highlights the need for responsible practices and potential regulation. Adapting to this changing landscape will be essential for traders, bot creators, and the crypto community as a whole to ensure a fair and thriving market in the future.
