- A MEV arbitrage bot on Solana earned $1.8 million in 20 seconds by back-running trades of the memecoin dogwifhat (WIF).
- The bot’s operator, 2Fast, turned 703 SOL into 19,035 SOL, benefiting from a trader’s costly mistake in a low-liquidity pool.
Solana Bot’s Rapid Windfall from Memecoin Trade
In an astonishing display of strategy and timing, a Solana-based MEV (Maximal Extractable Value) arbitrage bot, operated by 2Fast, has earned a staggering $1.8 million from a single transaction bundle on the Solana network.
The Mechanics of a Lucrative Back-Running Strategy
The substantial profit was derived from a back-running strategy targeting trades of the memecoin dogwifhat (WIF). This strategy capitalized on a trader’s error, who, due to a misplaced order in a low-liquidity pool, inadvertently spent nearly $9 million to acquire WIF at an inflated price of $3 per unit, significantly higher than its market rate of $0.2. The transaction bundle executed by 2Fast turned 703 SOL, valued at approximately $70,000, into a remarkable 19,035 SOL, worth around $1.9 million.
Back-Running: A High-Stakes Game
Back-running is a sophisticated MEV strategy that leverages the temporary price movements triggered by another transaction. In this scenario, MEV bots, including 2Fast’s, constantly monitor the mempool – a holding area for unconfirmed transactions on the blockchain. These bots identify target transactions and swiftly prepare their own transactions to follow suit, exploiting opportunities created by price fluctuations. On-chain data indicates that 2Fast was not alone in benefiting from this situation, as other bots also managed to seize a share of the profits.
Jito Labs’ Role in Enabling MEV on Solana
This MEV exploit was made feasible on Solana through the Jito Block Engine, developed by Jito Labs. This off-chain blockspace auction system allows traders to submit transaction bundles with bids for their inclusion in the blockchain. The goal of this system is to improve the reliability of transaction execution on the Solana network. Validators running the Jito client on Solana receive SOL earned from MEV tips.
The successful execution of this MEV strategy by 2Fast’s bot highlights the complex and dynamic nature of blockchain transactions. While such exploits offer lucrative returns for operators, they also underscore the need for vigilance and strategic acumen in navigating the cryptocurrency landscape. The incident with the Solana-based bot serves as a testament to the innovative, yet high-risk environment of the crypto world, where a single transaction can lead to monumental gains or losses.