An anonymous trader operating a cryptocurrency arbitrage bot has recently executed a flash loan involving $200 million worth of the $DAI stablecoin, in a large transaction that yielded a modest profit of just $3.24 after transaction fees were taken into account.
According to data shared by Arkham Intelligence on social media, the $200 million worth of the stablecoin were minted and borrowed in a single transaction in what is known as a flashloan. The arbitrage bot, used to take advantage of price discrepancies on the market, exploited MakerDAO’s ‘DssFlash’ contract for zero-fee borrowing of its DAI.
This morning, $200M worth of DAI was minted and burned by MakerDAO in the same block.It was part of an arbitrage transaction with a net profit of… $3?Why did this happen – and what does this mean?Details below 👇 pic.twitter.com/wWLZeC8All
— Arkham (@ArkhamIntel) June 14, 2023
Flash loans, as they are taken and repaid within a single transaction, do not require any collateral. The bot secured 200 million DAI tokens and swiftly funneled them into the Aave DAI market. It then borrowed $2,300 worth of wrapped ether (WETH), a form of cryptocurrency pegged to the value of Ethereum.
The WETH was then utilized to purchase Threshold Network (T) tokens on the Curve platform, which were subsequently sold on Balancer, another decentralized finance protocol, all within a single block of transactions.
The total profit from this whirlwind of activity was $33, but almost $30 was consumed by transaction and protocol fees, resulting in the aforementioned net gain of $3.24.
In this case, the 200M DAI was borrowed from MakerDAO, supplied to the AAVE DAI Market, and $2.35K in WETH was borrowed against this. The WETH was used to buy Threshold Network (T) on Curve and sell it on Balancer, making a total profit of 0.019 ETH ($33) pic.twitter.com/D3ubgBB5pg
— Arkham (@ArkhamIntel) June 14, 2023
As CryptoGlobe reported, bots on the Ethereum blockchain are a profitable business. A mysterious entity has caught the attention of the cryptocurrency community over the last few months after it started making millions of dollars and consuming a large percentage of the network’s gas fees, while operating a Maximal Extractable Value (MEV) bot.
An MEV bot, it’s worth noting, is made to take advantage of Maximal Extractable Value, which is seen as the maximum amount of value that can be extracted from every block on the Ethereum network by influencing its content or order. These bots can, for example, take advantage of decentralized exchange arbitrage opportunities, or execute sandwich attacks.
A sandwich attack sees the bot execute two transactions around those of another user to manipulate the price of an asset that the user is trying to trade and make a profit off of the price difference.
The MEV bot, known as Jaredfromsubway.eth, was detected in more than 60% of all Ethereum blocks in the week starting from April 17, according to EigenPhi. The firm says that the entity sometimes used simple arbitrage strategies, but mostly focused on buying and selling tokens in its sandwich attacks.
Featured image via Unsplash.
