Crypto trader gets sandwich attacked in stablecoin swap, loses $215K

Sandwich Attack Triggers $215,500 Loss for Crypto Trader

Introduction

A crypto trader recently fell victim to a sandwich attack, losing almost 98% of the value of a $220,764 stablecoin transfer. The attack, which occurred on March 12, was a result of a Maximum Extractable Value (MEV) bot successfully front-running the transaction.

The Attack

The MEV bot swapped $220,764 worth of USD Coin (USDC) stablecoin to $5,271 of Tether (USDT) in just eight seconds. This resulted in a profit of over $215,500 for the attacker. The attack occurred on Uniswap v3’s USDC-USDT liquidity pool, which has a locked value of $19.8 million.

MEV Bot’s Tactics

The MEV bot employed a clever tactic to front-run the transaction. It swapped all the USDC liquidity out of the Uniswap v3 USDC-USDT pool and then put it back in after the transaction was executed. This allowed the bot to profit from the swap and leave the trader with a significant loss.

Investigation and Speculation

The founder of The DeFi Report, Michael Nadeau, revealed that the attacker tipped Ethereum block builder "bob-the-builder.eth" $200,000 from the $220,764 swap. Nadeau also speculated that the same trader may have fallen victim to a total of six sandwich attacks, citing "internal tools."

DeFi researcher "DeFiac" pointed out that all funds traveled from borrowing and lending protocol Aave before being deposited on Uniswap. Two of the wallets fell victim to an MEV bot sandwich attack on March 12, with the transactions occurring around 9:00 am UTC.

Past Attacks

The same trader may have been targeted by the MEV bot on multiple occasions, with the bot profiting from the sandwich attacks. The exact number of attacks is unclear, but it is evident that the MEV bot has been actively targeting traders on Uniswap.

Money Laundering Suspicions

Some speculate that the trades could be attempts at money laundering. 0xngmi, founder of crypto data dashboard DefiLlama, suggested that an individual with illicit funds could use a similar strategy to launder their money with minimal losses.

Conclusion

The recent sandwich attack on a crypto trader highlights the need for increased vigilance and awareness in the DeFi space. MEV bots are increasingly becoming a threat to traders, and it is crucial for platforms like Uniswap to implement effective measures to prevent these attacks.

FAQs

Q: What is a sandwich attack?
A: A sandwich attack is a type of MEV attack where a bot front-runs a transaction, taking advantage of the delay between the submission of a transaction and its confirmation on the blockchain.

Q: What is MEV?
A: MEV stands for Maximum Extractable Value, which refers to the profit that a bot can make by front-running a transaction.

Q: How did the MEV bot execute the attack?
A: The MEV bot swapped all the USDC liquidity out of the Uniswap v3 USDC-USDT pool and then put it back in after the transaction was executed.

Q: How much did the trader lose in the attack?
A: The trader lost almost 98% of the value of the $220,764 stablecoin transfer, resulting in a loss of over $215,500.

Q: Has Uniswap implemented measures to prevent sandwich attacks?
A: Yes, Uniswap has implemented measures to prevent sandwich attacks, including MEV protection and default slippage settings on its front end.