Crypto trading bot borrows $200M for a $3 gain

Flash Loan Arbitrage Bot Makes a $3.24 Profit

A crypto trading bot, programmed to execute arbitrage trades, made intricate maneuvers within the Ethereum blockchain, even taking a $200 million flash loan, in order to gain a mere $3.24 in profit.

On June 14th, Arkham Intelligence, a blockchain analysis company, released an analysis of the bot’s activities. According to their report, the transaction was conducted by a flash loan arbitrage bot.

The analysis firm stated that the reason for the large amount of Dai (DAI) borrowed was due to MakerDAO’s “DssFlash” contract, which permits zero-fee borrowing of any amount of DAI up to a maximum of $500 million. This implies that the bot is able to make uncollateralized loans as long as the assets loaned are returned within the same block.

According to Arkham, 200 million DAI was taken from the MakerDAO DeFi protocol and given to the Aave DAI market. After that, 1.349 Wrapped Ether (WETH) was obtained by using the funds as collateral. This WETH was then used to buy Threshold Network (T) tokens on Curve Finance and sold on the Balancer liquidity protocol.

Through these trades, the bot accumulated a total of 0.019 Ether (ETH), valued at around $33 when the trades were made. Unfortunately, the transaction fees for the trade amounted to approximately $28.76, with an additional $1 sent to the block builder. This left the bot with only $3.24 in profit.

Sandwich Trading Bots Lose Income Due to Exploit

Sandwich trading bots have lost their main source of income due to a $25M exploit.

Despite the fact that the potential risk was disproportionate to the reward, a member of the community gave praise to the bot, stating that “profit is profit.” One Twitter user remarked that taking on such a venture for a meager gain is indicative of the current bear market.

Meanwhile, not all bots are engaged in low-profit trading. On April 20, a bot operator made more than $1 million through sandwich attacks on memecoin traders. The majority of the gains were earned by targeting trading activity involving memecoins such as Pepe coin (PEPE) and Wojak (WOJAK).

Can Blockchain Increase Trust in Artificial Intelligence? – Moral Responsibility

Magazine: “Can Blockchain Increase Trust in Artificial Intelligence?” – Moral Responsibility

Categorized in:

Crypto