March 28, 2024

Media: "Sandwich bots" stole millions of dollars from memcoin investors

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Media: 'Sandwich Bots' Stole Millions of Dollars from Memecoin Investors

Automated programs called "sandwich bots" have made millions of dollars by bypassing lucrative buy orders for popular crypto assets.

For the first time about successful sandwich bot attacksbecame widely known in 2021 thanks to research from the Eden Network. Using special bots, the attacker monitors transfers in the pool of unconfirmed transactions in any of the blockchains of interest to him. Then, when the bot finds a large order that will inevitably lead to a change in the price of the asset, it buys back this asset in advance at a more favorable rate, “pushing” its transaction ahead of the trader’s original order at the expense of an increased commission. After the order is executed and the price changes, the attacker sells the asset for a profit. Since all processes are automated and occur almost instantly, the trader does not have time to react or does not notice the catch at all.

A surge of interest among inexperienced investors inmemtokens, as well as competition for profits, only make the task easier for “sandwich bots”. In particular, the bot, called jaredfromsubway.eth, has currently earned about $1.7 million, including operations with the PEPE memtoken. Cumulatively, over the past two months, this “sandwich bot” has spent nearly $7 million in fees on more than 180,000 transactions to advance trades. 

Part of the crypto community perceives attacks fromsides of “sandwich bots” as inevitable. Another believes that this is a huge problem that attracts very little attention from traders and will likely lead to user churn in the long run.

“Sandwich bot tactics are no different fromfront trading, an illegal practice in which traders use inside information to bypass large buy orders and make a profit. If “sandwich attacks” were considered theft, like other hacks, then they would take second place in terms of damage caused,” an investor who wished to remain anonymous told reporters.

Earlier, the Bits.Media portal published material on the principles of making money on cryptocurrency, choosing an investment object and trading style.