In the context of the increasing popularity of blockchain technology, the cryptocurrency trading ecosystem is also rapidly expanding. Decentralized exchanges (DEX) have become important platforms for digital asset trading due to their advantages of disintermediation and transparency. As the market matures, various automated trading tools have emerged. MEV (Maximal Extractable Value) bots are automated programs used to execute strategies and other trading tactics on blockchain networks. They extract maximum value by rearranging, inserting, or delaying blockchain transactions. This article will delve into the definition, principles, implementation methods, determining factors, and optimization directions of sandwich bots. With technological development and market demand, sandwich bots have evolved into various types to adapt to different trading environments and strategy needs.

Sandwich Bots: By listening to large orders in the transaction pool, they can submit transactions with higher Gas fees before these orders are officially recorded on the blockchain, thus completing the transactions ahead of users.
Arbitrage Bots: Focus on profiting from price differences between DEXs.
New Token Release Bots: Focus on price fluctuations during new token issuance.
Liquidity Pool Arbitrage Bots: Engage in arbitrage by transferring assets between different liquidity pools.
Flash Loan Arbitrage Bots: Utilize the characteristics of flash loans for trading.
Triangle Arbitrage Bots: Trade between three different token pairs to exploit exchange rate differences for arbitrage.

This article primarily analyzes sandwich bots. A sandwich bot is an automated trading tool specifically designed to profit from front-running transactions in decentralized exchanges. It captures on-chain trading opportunities quickly, executing trades before or after the target transaction, thus earning the price difference. The core of sandwich bots lies in seizing trading opportunities with high efficiency and speed.
Implementation Ideas:

Real-time Transaction Monitoring: Use a WebSocket to connect to blockchain nodes and monitor transactions awaiting packaging in real-time.
Filtering and Screening: Filter out transactions unrelated to the strategy and those involving its own address.
Dynamic Gas Price Adjustment: Manually set a higher Gas price to prioritize the robot's transactions with miners.
Decoding Transaction Data: Use smart contract interfaces to decode transaction data and determine the tokens and amounts involved in the transactions.

Determining Factors:

Transaction Speed: Network latency and node response time directly affect the robot's reaction time.
Gas Fees: Gas fees are an important consideration when seizing transaction priority.
Market Liquidity: High liquidity helps execute large transactions quickly without significantly impacting market prices.
Contract Security: The security of the target contract directly relates to the risk of strategy operations.
Competitive Environment: There may be multiple sandwich bots in the market competing for profit opportunities simultaneously.

MEV bots provide an efficient solution for arbitrage in decentralized exchanges. Through real-time analysis and rapid execution, they can gain an edge in the market. However, sandwich bots also face challenges of high competition and high risk. Investors need to comprehensively consider technological implementation, risk control, and market strategies to remain competitive in the ever-changing cryptocurrency market. In the future, with technological advancements and the expansion of the DeFi ecosystem, sandwich bots are expected to play a greater role in more fields, creating more value for users.
This article was written by KenLee from the ZAN Team (X account @zan_team). The content is intended for technical sharing and does not constitute any investment advice.