Clarifying the sandwich attack, also known as front-running, it falls within the context of Maximum Extractable Value (MEV) strategy. In this scenario, the attacker identifies a pending transaction in the network and deliberately executes a "sandwich" for that transaction by submitting repeated requests before and after the targeted transaction. It's worth noting that front-running, despite being prominent in MEV, is not the sole form, as there are other manifestations like back-running and manipulation of transaction requests, among others.
These attacks commonly occur on Decentralized Finance (DeFi) platforms and Decentralized Exchanges (DEXs) due to their transparent nature. This transparency, while a vital feature in blockchain technology, inadvertently allows infiltrators to scrutinize the blockchain for sizable pending transactions to exploit.
•How Sandwich Attacks Operate and Their Mechanisms in the Cryptocurrency World#
The attacker employs a robot to execute transactions preemptively on the blockchain, typically involving larger transaction sizes. This means that when the victim initiates a transaction, the attacker utilizes the robot to buy a substantial amount of tokens just before the victim's transaction is finalized, using high gas fees to ensure their transaction is prioritized. When the attacker buys the tokens ahead of the victim, it immediately leads to a surge in the token price for the victim. Subsequently, the attacker swiftly sells the tokens, profiting from the victim's transaction. Amplifying the sell order through this process, the attacker benefits from the manipulated price difference, often causing the victim to incur tangible financial losses.
In the digital technology realm, jaredfromsubway.eth stands out as a widely-known robot with a notorious reputation, showcasing its ingenuity in generating substantial profits amounting to approximately $34 million within a period not exceeding three months through executing sandwich attacks. This controversial robot highlights its ability to exploit vulnerabilities in decentralized transaction systems, aiming to maximize profits.
According to a report from Dune, jaredfromsubway.eth not only succeeded in profit generation but has also become the leading gas consumer on the Ethereum network. This robot has invested an impressive sum, surpassing $90 million, in gas fees up to the current moment. This substantial figure reflects the robot's immense capability to impact transaction costs, outspending many significant institutions in the cryptocurrency domain.
Notably, the influence of jaredfromsubway.eth manifests in shaping cost policies and significantly affecting market trends. This scenario underscores the necessity for a profound understanding of the employed technologies and the imperative to enhance security to prevent the exploitation of such vulnerabilities in the evolving landscape of cryptocurrencies.
•Steps you can take to enhance your protection against sandwich attacks:
-Elaborating on the Concept of Slippage:
Slippage refers to the difference between the expected displayed price of a transaction and the actual price at which the transaction is executed. This variance arises due to the rapid movements in markets, where the original price can change within moments as you attempt to execute your trade.
Let's say you set a slippage tolerance of 10%. This means you are willing to accept the transaction at a price that is higher or lower by 10% than the displayed price when trading begins. If the price exceeds this percentage, your order will be canceled.
By setting a low slippage, it's imperative that the price of your token remains within a narrow range to execute the transaction. If an attacker purchases substantial amounts, surpassing your slippage tolerance, your order will be canceled. Although there is a possibility of cancelation if the price increases or decreases by more than 10%, having low slippage significantly reduces the potential profitability for the attacker, limiting their profit margin and safeguarding your tokens.
- Elaboration on Slippage Tolerance and Utilizing Liquidity Aggregators:
When delving into the topic of slippage tolerance, the commonly recommended tolerance of 0.5-1% is typically sufficient to accommodate natural price fluctuations. However, caution is necessary, as excessively low slippage tolerance may lead to trade failures, ultimately resulting in gas wastage.
It is wise to adjust your slippage tolerance based on a diverse range of factors. Consideration should be given to specific assets, each having its own level of volatility.
Additionally, factoring in token taxes becomes crucial, as they play a significant role in determining transaction costs. Market volatility is another factor that must be taken into account, impacting the speed and fluctuations in asset prices.
The use of liquidity aggregators is a strategic component in safeguarding your trading activities. These aggregators enable traders to access greater liquidity by consolidating buying and selling orders from various platforms. This approach reduces the likelihood of undesirable slippage, providing an effective means to control the price at which a transaction is executed.
•Increase Gas Fees to Prioritize Transactions Sorting
Traders can opt to increase gas fees in their transactions, especially when dealing with substantial amounts, making them more susceptible to potential sandwich attacks. While using lower gas fees might save costs, transactions with lower speed allow attackers to easily identify and execute their attacks.
By employing higher gas fees, transactions are executed more quickly, requiring attackers to consume significantly larger amounts of gas to carry out their transactions in advance. This is often costly for attackers, acting as a deterrent against effectively executing attacks. Despite the expense of using higher gas, traders should carefully consider the available options to protect their assets and ensure the safety of their trading activities in the market.
•Utilize Telegram Bots
Cryptocurrency bots on Telegram provide an efficient means to directly connect to your wallet and automate the execution of a diverse range of trades swiftly. There is currently a wide array of these bots in the market, and while each may offer unique functionalities, they generally share common core functions, such as stop-loss and take-profit orders, anti-scam features, trap detection, copy trading, multi-portfolio management, liquidity enhancement, and sniping strategies.
Some Telegram bots also offer additional functions you can leverage to enhance protection against sandwich attacks. These tools provide capabilities like security management, detecting probable behavior patterns, and executing custom protection strategies to mitigate risks, offering traders powerful tools to enhance their experience in the digital trading realm.
To counter sandwich attacks, most Telegram bots feature a special transaction function that allows users to conceal the details of their trades until execution. As mentioned earlier, the transaction becomes visible in the memory pool before confirmation, enabling attackers to scrutinize the blockchain for pending transactions susceptible to attack. By introducing the transaction detail concealment feature, MEV bots are prevented from displaying transaction details until it becomes practically impossible, thus hindering their ability to execute the transaction and successfully carry out an attack.
This enhancement makes it challenging for attackers to execute sandwich attacks successfully. By using the transaction detail concealment function, traders can present their deals more securely and safeguard their assets from manipulation. These additional measures contribute to enhancing the security of digital currency trading across the Telegram platform, reflecting the ongoing need for improving protection methods in the cryptocurrency world.
The private RPC network enables Remote Procedure Call (RPC) contracts for applications to communicate with the blockchain network. Currently, most traders use public RPC endpoints, which are available to everyone, exposing them to sandwich attacks due to the ability to scan and display pending transactions. By using a private RPC network, traders can conceal their transactions by directly sending them to the Ethereum network.
To achieve this, you can run your own node, allowing you to send transactions directly and hide them to prevent attacks. You can also control the timing and processing of your transactions, reducing dependencies on other platforms.
Another option is to adopt the MEV Blocker, a free RPC endpoint that helps protect your trades against MEV. The MEV Blocker sends your trade transaction to a network of researchers, preventing the execution of your trades in advance and safeguarding them against MEV attacks.
In conclusion, understanding sandwich attacks in the cryptocurrency world is becoming increasingly important as traders face growing challenges from attackers. Sandwich attacks pose a threat to trading strategies and impact transaction security.
Achieving a deep understanding of the attack processes and potential consequences is essential for any trader looking to safeguard their assets. Prevention measures against sandwich attacks include using private RPC networks to conceal details, running a private node to enhance control over trading operations, and adopting tools like MEV Blocker for additional protection.
With the evolution of platforms and emerging technologies, staying knowledgeable and seeking effective solutions remains a crucial part of enhancing the security and efficiency of trading operations in the cryptocurrency realm.