Solana-Based Bot Nets $1.7M from Mismanaged Memecoin Trade
Summary:
An automated bot operating on Solana made a $1.7 million profit from a clumsy trade where a trader purchased $9 million worth of memecoin Dogwifhat (WIF). The bot, controlled by 2fast, used a tool developed by Jito Labs to take advantage of the mispriced trade and convert transactions within one bundle. This arbitrage method, known as backrunning, is less harmful to blockchain networks. However, the trader who instigated the sequence with their hefty purchase sustained a significant loss of 92%. Despite this, the event led to a price spike and subsequent renewed interest in WIF.
An automated bot operating on the Solana platform recently turned a considerable profit of $1.7 million from a single dubious transaction. The event transpired when an investor ineptly purchased memecoin Dogwifhat (WIF) amounting to $9 million. Utilizing the Solana platform, the bot, controlled by 2fast, swapped 703 Solana (SOL) for 490,000 WIF and then converted the same WIF quantity back into 19,035 SOL all in one transaction bundle, ultimately making a cool profit of $1.73 million according to Solscan's data. MEV bots are automated systems designed to scan blockchain networks for potential profitable trades and execute these trades autonomously. Jito Labs, the development subsidiary of Solana's liquid staking protocol Jito, has built the tool utilized by the bot. The tool, operating similarly to Ethereum's flashbots, enables bots to search for maximum extractable value, submitting bids to be included in the transaction bundle. This quick arbitrage maneuver was facilitated by a single individual, zeroxtrading.sol, who bought a massive $8.9 million worth of memecoin in a single transaction exerted in a low-liquidity pool, drastically overpaying for the tokens and experiencing a prompt 92% loss of their investment. Developer Pland elaborated on the incident in a Jan. 11 post, explaining that the bot employed a relatively straightforward backrunning tactic to capitalize on the inefficient trade made by the individual. This arbitrage opportunity was less damaging to the blockchain network as it merely took advantage of a significantly mispriced trade, unlike more harmful "sandwich" attacks that often result in a loss for blockchain users by repricing initial bids after sandwiching an order between two transactions. Meanwhile, despite the massive loss on the initial trade, the price of WIF saw a brief spike to $4, reigniting interest in the meme-coin with a 50% increase in value following the plunge.
Published At
1/12/2024 8:53:25 AM
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