- A Solana MEV bot earned $1.7 million in profit from a single unusual trade involving the memecoin WIF, exploiting price disparities.
- This bot used advanced tools from Jito Labs to execute the trade, highlighting the significance of MEV bots in crypto markets.
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 trade took an unconventional route, but the MEV bot’s swift execution led to substantial gains.
$SOL MEV bot just made almost 2M profit arb + 100k tip to @jito_sol validator. pic.twitter.com/H9rUtyCa1k
— NB
(@norbertbodziony) January 10, 2024
Solana, known for its robust and efficient blockchain, witnessed a significant profit of $1.7 million orchestrated by an MEV bot operated by the entity known as ‘2fast.’ This impressive feat unfolded as the bot executed a sequence of swaps involving 703 Solana (SOL) tokens and 490,000 WIF tokens, which were then converted back into 19,035 SOL. The result? A profit that left the crypto community in awe, as reported by Solscan data.
Automated algorithms, known as MEV bots (Maximum Extractable Value bots), constantly monitor blockchain networks for lucrative trade opportunities, aiming to profit from them. Moreover, these bots take advantage of pricing differences, quickly carry out orders based on set criteria, and make large profits.
MEV and Solana’s Innovative Mechanism
The MEV bot’s success story 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. Thus, 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. As a result, 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.
The Backrunning Strategy
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, as opposed to more destructive “sandwich” assaults, 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.
Yesterday someone swapped 86k SOL (8.6 million $) for a single swap to buy $WIF
But he did it in the most inefficient way possible
At the time of purchase, there was only 11k SOL on the Raydium AMM, 19k SOL on Orca and 60k SOL on Meteora
And this created an arb opportunity pic.twitter.com/dOGIHkj4G4
— Pland (@Pland__) January 11, 2024
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.
