A Detailed Analysis of the MEV Bot Malfunction Costing Users Over $400,000

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In a recent event of significant financial fallout, a Maximal Extractable Value (MEV) sniping bot malfunctioned, resulting in substantial losses surpassing $400,000 for investors who transferred funds to it.

Catastrophe Unfolded: The Alpha Group’s Unfortunate Mishap

Arkham Intelligence, a respected Blockchain analytics corporation, brought to light that several users from the Alpha group, driven by a potential profit-making opportunity, transferred 160 Ether (ETH) to the MEV bot. Their intention? To strategically capitalize on the launch of the new Poo Finance tokens. 

In this high-stakes gamble, these users parted with an additional 80 ETH as a bribe, securing a coveted spot in the first block transaction. Their total commitment? An eye-watering 240 ETH, equating to an approximate value of $440,000, with the singular goal of sniping Poo Finance tokens.

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Unfortunately, the bot’s programming faltered, misdirecting the 160 ETH to an unintended Uniswap V3 pool. Arkham Intelligence suggested this incorrect transaction occurred following an ‘add liquidity’ directive detected by the developer.

As the Poo Finance developer contributed 40 ETH of liquidity to the primary pool, the bot’s buy transaction misfired, aiming for a smaller pool with a less substantial token supply.

Transaction Priorities and the MEV Bot: A Complex Dance

Usually, transactions are orchestrated based on transaction fees, giving preference to those willing to pay a premium. An MEV bot, with its cutting-edge capabilities, can leverage this transaction data to maximize its profit potential, running either arbitrage or front-running transactions.

Regrettably, in this case, the hefty 80 ETH bribe resulted in the MEV bot securing only 4 ETH worth of the Poo Finance tokens, a far cry from the anticipated returns.

Further exacerbating the situation was that all of the 160 ETH was funneled to the Uniswap router. Owing to the specific function employed for this token swap, the surplus ETH was not returned, amplifying the financial loss.

Another bot, known as 0x9dd, swiftly swept the leftover ETH from the Uniswap router, paying a mere 0.43 ETH (approximately $800) to claim an extra $196,000 lingering in the router.

Consequences and Winners: A Bleak Balance Sheet

While the initial bot holds over 6 billion POO tokens equating to about 3 ETH, the expenditure outweighs the gains, having spent more than $400,000.

In this complex chain of transactions, the primary beneficiaries were the validators who were incentivized to prioritize these high-stake transactions.

In the realm of MEV bots, this is not an isolated incident. Earlier in the year, an MEV bot known as Jaredfromthesubway.eth amassed millions via sandwich attacks and arbitrage opportunities. On April 19, the bot invested over $1 million in gas fees to generate profit from several memecoin trades.

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