MEV bot made $1.7m profit from a ‘non-performing’ Dogwifhat trade
A Solana-based maximum leveraged value (MAV) bot managed to make an astonishing $1.7 million after a questionable trade occurred “in the most inefficient way possible” when a trader bought $9 million in memecoin Dogwifhat (WIF).
Solscan revealed that 2flow's maximum extractable value (MEV) bot, 703 Solana (SOL), traded 490,000 WIF for 19,035 SOL in the same trading package, netting itself a $1.73 million profit, according to Solscan. Data.
MEV bots are automated programs that scan blockchain networks to identify profitable trading opportunities and automatically execute those orders.
The bot used tools developed by Gito Labs, the development arm of Gito, Solana's liquid stacking protocol. The tool – which works in a similar way to Flashbots on the Ethereum network – allows bots to search for the highest possible extractable value and submit bids for inclusion in a transaction package.
This sudden arbitrage game happened following a trade by one trader – zeroxtrading.sol – who bought $8.9 million worth of MemeCoin in one order.
The discount was made in a low liquidity pool, which caused the order to be filled at approximately $3 per WIF token, which is 1,400% more than the token was worth at the time. The subsequent and rapid decline after the trade caused the trader to lose 92% of their money instantly.
In a Jan. 11 post on X (formerly Twitter), developer Plan wrote that the MEV bot used a relatively simple backdoor scheme to capture the profits of a trader who executed a WIF order as “impossible” as possible.
2 Faster, MevBot uses JITO to combine both the buyer transaction and the transaction and includes an 890 SOL tip.
Bot bought 490k WIF for 703 SOL from radium concentrate liquidity to sell for 19 035 SOL in same transaction pic.twitter.com/sAbSVwOEZx
— Planned (@Planned__) January 11, 2024
Backrunning is considered harmless to the blockchain network, as it only captures the arbitrage opportunity that large-scale lopsided trading offers and does not affect the original trade.
This is in contrast to “sandwich” attacks, which involve sandwiching an order between two transactions to negate the original bid. This often affects the initial trading price and causes blockchain users to lose money.
Related: Solana now boasts over 2,500 monthly active developers.
Overall, the single transaction pushed the price of WIF up to $4 for a short period of time.
While the trader was still out of pocket for the wrong order, the massive candle drives WIF to start picking up again, posting a 50% gain immediately after the memecoin drop.
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