The Rise of “Sandwich Attacks” on MEV Contracts: A Deep Dive

On April 30th, EigenPhi detected that three MEV contracts had made significant profits through “sandwich attacks”. The MEV contract starting with 0x6b75 earned a profit of $465126 from $33374 within 7 days, with a return on investment of 1400.1%. The MEV contract starting with 0x4707 earned a profit of $27204 from $18 within 7 days, with a return on investment of 64346%. The MEV contract starting with 0x0000 earned a profit of $45496 from $687 within 7 days, with a return on investment of 3145.5%.

A sandwich attacker earned over $460000 for $30000

Introduction

On April 30th, 2021, EigenPhi, a blockchain analytics company, detected that three Miner Extractable Value (MEV) contracts had earned significant profits through “sandwich attacks.” Such attacks occur when an attacker places two transactions on either side of a target transaction in the mempool, leveraging timing and gas prices to earn profit. In this article, we will examine the three MEV contracts that were the victims of sandwich attacks and explore the implications of these attacks for the broader blockchain ecosystem.

Understanding MEV Contracts

Before investigating the sandwich attacks, it’s crucial to understand what MEV contracts are. MEV describes the profit available to miners from activities such as reordering, censoring, or executing transactions. Some miners have begun to bundle, or “bundle extract” transactions, to maximize MEV. These bundles are compiled using a smart contract, which would execute the transactions in a specific order, allowing the miner to earn more than just transaction fees.
MEV contracts are smart contracts that facilitate the execution of these MEV extraction strategies. However, these contracts have become an attractive target for attackers that exploit their characteristics, resulting in significant profits via sandwich attacks.

The MEV Contracts Targeted by Sandwich Attacks

EigenPhi’s detection of the three MEV contracts that fell prey to sandwich attacks led to public shock and scrutiny of the blockchain ecosystem. These contracts were:
1. The MEV contract starting with 0x6b75. This contract earned a profit of $465,126 from $33,374 within seven days, with a return on investment of 1,400.1%.
2. The MEV contract starting with 0x4707. This contract earned a profit of $27,204 from $18 within seven days, with a return on investment of 64,346%.
3. The MEV contract starting with 0x0000. This contract earned a profit of $45,496 from $687 within seven days, with a return on investment of 3,145.5%.
These profits were achieved via sandwich attacks, indicating how vulnerable MEV contracts are to such attacks — which could have broader implications for the entire blockchain ecosystem.

Implications for the Broader Blockchain Ecosystem

Sandwich attacks on MEV contracts indicate the presence of vulnerabilities in MEV mining and bundle extraction. It’s important to note that the increase in MEV contracts’ use could lead to further exploitation opportunities for attackers.
While sandwich attacks are currently limited to MEV contracts, they are a warning sign for the entire blockchain ecosystem. The broader implications include the vulnerability of transactions to timing and gas price manipulation, which could lead to delays and higher transaction costs. The prevalence of multiple DeFi protocols with smart contracts handling financial transactions is also troubling, as flaws in the contracts could lead to issues regarding user data or financial losses.

Conclusion

Sandwich attacks on MEV contracts are a warning sign for the broader blockchain ecosystem. The vulnerability exposed could lead to further exploitation opportunities for attackers and potential financial risks for investors. It is essential to consider potential vulnerabilities in smart contracts and enhance the security of MEV contracts to prevent future attacks.

FAQs

1. How do sandwich attacks work?
Sandwich attacks involve placing two transactions on either side of a target transaction in the mempool, leveraging timing and gas prices to earn profit.
2. Are there any solutions to prevent sandwich attacks?
Enhancing the security of MEV contracts and considering potential vulnerabilities in smart contracts could prevent sandwich attacks.
3. What other implications could sandwich attacks have on the blockchain ecosystem?
The prevalence of multiple DeFi protocols with smart contracts handling financial transactions is also troubling, as flaws in the contracts could lead to issues regarding user data or financial losses.