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Uniswap: Stuck between MEV bots and sandwich attacks

2min Read

The influence of MEV bots on Uniswap has increased, resulting in losses for users. However, the price of UNI maintains its upward trajectory.

Uniswap: Stuck between MEV bots and sandwich attacks

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  • The presence of MEV bots on Uniswap grew, impacting users, who incurred losses.
  • However, the price of UNI continued to grow.

Uniswap [UNI], one of the largest DEXes in the crypto sector, has always shown dominance in the space. However, MEV bots and sandwich attacks have been a constant pain for the protocol.

Realistic or not, here’s UNI’s market cap in BTC’s terms

Too many bots

For context, MEV (Miner Extractable Value) bots are automated programs used by miners to maximize their profits. They search for profitable opportunities in blockchain transactions.

A sandwich attack occurs when a MEV bot positions itself between a trader’s transaction and the blockchain. It can manipulate prices, causing the trader to buy at a higher price or sell at a lower price.

MEV bots aim to capture these price differences, earning profits at the expense of regular traders. This practice can lead to unfair advantages and market inefficiencies.

According to Arkham Intelligence, a user lost a whopping $700,000 in just 12 seconds due to MEV Bots. This individual, identified as 0×568, made a big error when creating a new pool for WBTC-CRV on Uniswap v3.

They accidentally added $1.5 million worth of liquidity, well above the fair market price.

MEV Bots swiftly swooped in, aiming to swap CRV tokens for valuable WBTC. The first bot managed to grab $1.36 million worth of WBTC by trading $730,000 worth of CRV tokens.

However, the bot’s profit was only around $260 because it had to pay a significant $527,000 in ETH to the validator for the transaction. This incident highlights the risks associated with MEV and the importance of careful transactions.

This incident could raise concerns among liquidity providers on Uniswap. They might worry about accidental errors and the influence of MEV Bots, which aim to take advantage of such situations.

Is your portfolio green? Check out the UNI Profit Calculator

Liquidity providers could thus become more cautious about adding liquidity to pools to avoid potential losses due to price discrepancies. It might also lead to a reassessment of the procedures for creating and managing liquidity pools on decentralized exchanges.

State of UNI

Despite these challenges, the UNI token remained unaffected. At press time, UNI was trading at $4.89 and had grown by 3.14% in the last 24 hours.

Source: Santiment


Himalay is a full-time journalist at AMBCrypto. A Computer Science graduate, Himalay writes about crypto with a special focus on the latest coin-based updates. He is a fan of gonzo journalism, transgressive fiction, heavy metal, and Manchester United.
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