A Solana-based maximum extractable value (MEV) bot recently seized a $1.7 million profit from a single, unconventional trade involving the memecoin Dogwifhat (WIF). The bot, operated by an entity known as ‘2fast’, executed a sequence of swaps involving 703 Solana (SOL) tokens and 490,000 WIF tokens, which were then converted back into 19,035 SOL. This impressive feat left the crypto community in awe.
MEV bots, automated algorithms, constantly monitor blockchain networks for lucrative trade opportunities, aiming to profit from them. They take advantage of pricing differences, quickly carry out orders based on set criteria, and make large profits. The success of this MEV bot on Solana was made possible through the use of a sophisticated tool developed by Jito Labs, the development arm of the Solana liquid staking protocol, Jito.
This innovative off-chain blockspace auction system allows traders to submit transaction bundles accompanied by bids for their inclusion in the Solana blockchain. The primary objective of this mechanism is to enhance the reliability and efficiency of transaction execution on the Solana network.
The catalyst for this remarkable arbitrage opportunity came from a trader known as ‘zeroxtrading.sol,’ who made a colossal $8.9 million purchase of WIF tokens in a low-liquidity pool. This decision caused the order to fill at an excessive rate of approximately $3 per WIF token, which was an astonishing 1,400% higher than the token’s intrinsic value at that time. Consequently, the immediate aftermath of this trade saw the trader facing a devastating 92% loss of their funds.
In a post from January 11, pseudonymous developer Pland revealed that the MEV bot used a very basic backrunning tactic to profit from the trader’s ineffective deal execution. Backrunning aims to profit from large-scale mispriced trades by seizing arbitrage opportunities without causing harm to other users of the blockchain network or the initial trade price.
As a direct result of this unconventional trade, the price of WIF experienced a brief surge, reaching as high as $4. Despite the trader’s substantial losses, this price movement prompted renewed interest among crypto enthusiasts, leading to a 50% gain in the price of WIF shortly after the dramatic drop.
It’s worth noting that MEV tips direct the Sol tokens earned towards validators who operate the Jito client on the Solana blockchain. This creates a symbiotic relationship between MEV-seeking bots and the validators, incentivizing the latter to maintain a robust network while the former extracts value from trading opportunities.
This News Article was automatically generated by Bob the Bot (AI)
| Information | Details |
|---|---|
| Geography | Global |
| Countries | |
| Sentiment | neutral |
| Relevance Score | 1 |
| People | Pland, Norbert Bodziony |
| Companies | Solana, Crypto News Flash, Raydium AMM, Jito Labs, Jito, Meteora, Orca, Solscan |
| Currencies | Solana, dogwifhat |
| Securities | None |
