On March 12, an unfortunate crypto trader experienced a devastating sandwich attack while attempting a significant stablecoin transaction worth $220,764. This incident led to a staggering loss of nearly 98% of the transaction’s value, leaving the trader with a mere $5,271 after swapping their USD Coin (USDC) for Tether (USDT).
The attack was orchestrated by a Maximum Extractable Value (MEV) bot utilizing targeted algorithms to front-run the trader’s transaction within seconds. According to blockchain data, this exploit transpired on the Uniswap v3 USDC-USDT liquidity pool, which has over $19.8 million locked in value.
In a bid to maximize their gains, the MEV bot first eliminated the liquidity of USDC from the trading pool before executing the trader’s transaction. Once the transaction was completed, the bot restored the liquidity, profiting around $215,500 as a result. Notably, the bot also tipped the Ethereum block builder known as bob-the-builder.eth a hefty $200,000 from the swap.
Furthermore, industry analysts suggest that this particular trader—operating through various wallets—may have been targeted in as many as six sandwich attacks throughout the day. Two specific wallets were involved in significant transactions just minutes before the major loss, raising eyebrows regarding the rationale behind these occurrences. Some speculate that the transactions might have connections to money laundering attempts.
Critiques of platforms like Uniswap often emerge following such incidents; however, it’s essential to highlight that the Uniswap interface provides MEV protection along with default slippage settings. After clarifying the specifics of the incident, various experts admitted that the trader’s activities did not engage Uniswap’s protective mechanisms.
To mitigate risks associated with such trading incidents, experts recommend that traders remain vigilant and utilize available protections within DeFi platforms. As the landscape of decentralized finance evolves, continuous education on safeguarding funds from malicious actors is crucial.
