MEV Bot’s $12 Million Flash Loan Yields Meager $20 Profit

TLDR:

• An MEV bot took out a $11.9 million flash loan to execute a sandwich attack
• The attack targeted a user swapping $5,000 worth of Shuffle (SHFL) tokens
• Despite the large loan, the bot only made $20 in profit after gas fees
• The entire attack was executed in 14 transactions within a single block (~12 seconds)
• MEV bots have been highly profitable in the past, with one earning over $1 million in a week

A maximal extractable value (MEV) bot recently executed a sandwich attack using a massive $11.9 million flash loan, only to walk away with a mere $20 profit.

This incident, reported by blockchain analytics platform Arkham Intelligence on September 5, highlights the high-stakes nature of MEV operations and the thin margins that can sometimes result.

An MEV Bot just took out a $12 Million flashloan to make less than $20 in profit.

It sandwiched a user trying to swap $5K of SHFL to WETH using around 2% slippage.

Unlucky. pic.twitter.com/I1llVBN4fH

— Arkham (@ArkhamIntel) September 5, 2024

The bot borrowed $11.97 million in Wrapped Ether (WETH) to sandwich a user attempting to swap approximately $5,000 worth of Shuffle (SHFL) tokens.

A sandwich attack involves placing two transactions around a target trade to manipulate prices and profit from the price difference.

In this case, the MEV bot carried out a total of 14 transactions, including lending and borrowing operations involving around $700,000 in USD Coin (USDC) and WETH across decentralized finance protocols such as Aave and Uniswap.

The entire sequence of transactions was confirmed within a single Ethereum block, indicating that the bot completed its operations in roughly 12 seconds.

Despite the substantial loan and the complexity of the operation, the bot’s profit margin was razor-thin.

After accounting for gas fees – the cost of executing transactions on the Ethereum network – the bot was left with just over $20 in profit.

This outcome stands in stark contrast to some highly successful MEV operations in the past.

For instance, in April 2023, a bot operator known as “jaredfromsubway” reportedly earned over $1 million in a single week by executing sandwich attacks on traders of popular meme tokens like Pepe (PEPE) and Wojak (WOJAK).

The mechanics of a sandwich attack involve careful timing and execution. When a user submits a transaction to the blockchain, it first enters a waiting area called the mempool before being added to the next block.

During this window, the attacker sets up two transactions – one with a high gas fee to ensure it’s processed first, and another with a lower fee to be processed after the target transaction.

By buying the token at a lower price before the victim’s transaction and selling it immediately after at a higher price, the attacker can profit from the price difference.

However, as this recent case demonstrates, the strategy doesn’t always yield significant returns, especially when gas fees are taken into account.

The blockchain analytics firm Arkham Intelligence brought this particular case to light, showcasing the transparency of blockchain technology and the ability to track and analyze complex transaction patterns in real-time.