MEV bot pulls $1.7M profit from a single ‘inefficient’ Dogwifhat trade

The NFT Unicorn 018ad75a-ef10-47e2-8f23-62851fa82bbf MEV bot pulls $1.7M profit from a single ‘inefficient’ Dogwifhat trade Crypto News

A Solana-based maximum extractable value (MEV) bot managed to rake in a staggering $1.7 million from a single questionable trade that occurred when a trader made a $9 million purchase of memecoin Dogwifhat (WIF) “in the most inefficient way possible.”

The maximum extractable value (MEV) bot, run by 2fast, swapped 703 Solana (SOL) for 490,000 WIF and then swapped that same amount of WIF into 19,035 SOL within the same transaction bundle, netting itself a profit of $1.73 million, according to Solscan data. 

The MEV bot netted a profit of $1.73 million on one misplaced trade of the memecoin WIF. Source: Solscan

MEV bots are automated programs that scan blockchain networks to identify profitable trading opportunities and execute those orders automatically.

The bot utilized a tool developed by Jito Labs, the development arm of Solana liquid staking protocol Jito. The tool — which operates similarly to flashbots on the Ethereum network — allows bots to search for maximum extractable value and place bids for inclusion in the transaction bundle.

This sudden arbitrage play was made possible following a trade executed by a single trader — zeroxtrading.sol — who purchased a whopping $8.9 million of the memecoin in a single order.

The outsized bid was made in a low-liquidity pool, which caused the order to be filled at roughly $3 per every WIF token, around 1,400% more than the token was worth at the time. The subsequent and immediate drop following the transaction saw the trader lose 92% of their funds instantly.

In a Jan. 11 post on X (formerly Twitter), pseudonymous developer Pland wrote that the MEV bot utilized a relatively simple backrunning strategy to capture the gain from the trader who executed the WIF order in the most “inefficient way possible.”

Backrunning is considered less harmful to a blockchain network, as it only captures the arbitrage opportunity presented by a large mispriced trade and doesn’t impact the initial trade.

This contrasts with the more nefarious “sandwich” attacks, which involve sandwiching an order between two transactions to cause the initial bid to be repriced. This frequently impacts the initial trade price and leaves blockchain users at a loss.

Related: Solana now boasts more than 2,500 monthly active developers

Overall, the single transaction caused the price of WIF to briefly spike as high as $4.

The NFT Unicorn 81b2c6a2-1fda-448c-b0b1-cf6cd069e234 MEV bot pulls $1.7M profit from a single ‘inefficient’ Dogwifhat trade Crypto News
The outsized bid caused the price of WIF to spike to $4. Source: Birdeye

While the trader is still deeply out of pocket for their misplaced order, the giant candle inspired degens to begin snapping up WIF again, with the memecoin posting a 50% gain from the point immediately after the drop.

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Source: Cointelegraph