On March 12, a cryptocurrency trader suffered significant losses due to a cleverly orchestrated ‘sandwich attack’. The trader was attempting a $220,764 stablecoin exchange but was intercepted by a Maximum Extractable Value (MEV) bot, which shrank the trade’s value to a mere $5,271 of Tether. This swift transaction enabled the bot operator to profit over $215,500 in just eight seconds.
The attack occurred in the USDC-USDT liquidity pool of the decentralized exchange Uniswap v3, where approximately $19.8 million in value is locked. MEV bots are known to quickly swap all the liquidity out of a pool and then replace it after a transaction concludes. Michael Nadeau, the founder of The DeFi Report, mentioned that the attacker paid Ethereum block builder “bob-the-builder.eth” $200,000 from the hefty swap, pocketing a neat profit of $8,000.
Independent DeFi researcher “DeFiac” suspects that this unfortunate trader may have fallen prey to at least six sandwich attacks that day. He noted that all funds for the transaction were sourced from the borrowing and lending protocol, Aave, before moving to Uniswap. Additionally, two other wallets experienced identical MEV bot sandwich attacks on the same day just minutes before this incident, adding to the speculation of repeated attacks.
Meanwhile, some insiders are theorizing that these trades might be part of an elaborate money laundering scheme. Either way, the Uniswap CEO, Hayden Adams, and others were quick to defend Uniswap’s robust protocols designed to fend off such attacks. Having initially criticised Uniswap, Nadeau later confirmed that these compromised transactions did not originate from Uniswap’s front end, which features MEV protection and default slippage settings.