Ethereum Trading Bot Strategy ‘Extracted’ $107M in 30 Days, Research Suggests

Trading bots looking for perceived bugs in Ethereum's infrastructure have "extracted" at least $ 107 million in the past 30 days, according to new research.
The arbitrage strategy is popularly known as Miner Extracted Value (MEV) and involves bots identifying trades and targeting Ethereum mempools. The bots can use some watched techniques to benefit from targeted trading. For one, a bot finds a profitable trade in the mempool. Then it copies that trade and increases the gas price for its transaction. This is how a miner packs his copy trade before the original can go through.
"After scraping the Ethereum blockchain from the first block of 2020 (9193266), we found a total value of at least USD 314 million (~ 540,000 ETH) for extracted MEV since January 1, 2020," a middle article of the research group Flashbots States.
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The tech grossed at least $ 57 million, or 47.6 ETH, in January alone and $ 107 million in the past thirty days, the Flashbots data shows.
For example, this trade alerts Flashbots to the fact that a trade is continuously being re-offered to protect it from trading bots that have noticed it. The original trader was successful, but at the expense of the lurking bots, which wasted gas on a failed transaction and increased the congestion on the Ethereum blockchain.
Trading bots cause "negative external effects" for Ethereum
This second point is more important than a first glance can convey. Failed transactions generally increase the average transaction cost down the chain - a sore point for Ethereum users who have suffered average transaction fees of $ 20-30 - and "bloat" Ethereum by leaving traces of the failed transaction in the status the blockchain. In other words, MEV creates negative externalities for Ethereum (or a smart contract block chain).
It is important to note that MEV is not always done by miners, but mostly by trading bots, which are often run by market-making companies. In fact, there is little evidence that Ethereum miners have used MEV techniques to date. Some Ethereum mining pools have even created custom networks as a MEV workaround, e.g. B. SparkPool's Taichi network.
Related Topics: DeFi Loan Platforms Liquidate Record $ 115M in Loans As ETH Price Falls
Flashbots' dataset is only a rough estimate of the MEV, the research group warned, as the identification of arbitrage bots requires active on-chain management. According to Flashbots, the group continues to update their methodology to better reflect actual MEV values.
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The Ethereum Trading Bot Strategy "extracted" $ 107 million in 30 days
The Ethereum Trading Bot Strategy "extracted" $ 107 million in 30 days
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