Impact on Traders
Over the past week alone, 645 sandwich bots were identified as active on the BNB Chain, impacting approximately 43,400 DEX traders throughout the month. These figures illustrate the pervasive nature of sandwich attacks and their significant impact on the trading experience within the BNB ecosystem.
How Sandwich Bots Exploit the BNB Chain
According to data compiled by Dune Analytics, the trading volume on BNB Chain’s decentralized exchanges (DEX) reached $9.232 million during the past week, with sandwich bot transactions accounting for $1.322 million of this figure. But what exactly is a sandwich attack?
A sandwich attack, commonly referred to as front-running, is a form of Maximal Extractable Value (MEV) technique in which an attacker identifies a pending transaction and strategically places orders before and after it, effectively surrounding the target transaction. This manipulation allows the attacker to profit at the expense of the original trader.
Types of MEV Attacks
While front-running is one of the most prevalent MEV methods, it is not the only one. Other tactics include:
- Back-running: Following a target transaction to capitalize on its effects.
- Transaction Ordering Manipulation: Rearranging transactions in a block to maximize profit.
These types of attacks are especially common on DeFi platforms and DEXs, where the transparency of the mempool exposes transactions before they are confirmed. This transparency creates opportunities for malicious actors to exploit unsuspecting traders.
Comparative Analysis: Ethereum and Solana
In contrast to BNB Chain’s current struggles, Ethereum has seen a reduction in sandwich attacks since July 2023, with the percentage of affected transactions dropping from 62.9% to 40.2% over five months. Despite this improvement, over 12,000 DEX users on the Ethereum network fell victim to sandwich attacks in the past month, indicating that the issue persists across different blockchain platforms.
Solana has also experienced a rise in sandwich attacks this year. In response, the Solana Foundation took decisive action in June 2024, removing a group of validator operators from its delegation program due to their involvement in these attacks. The foundation emphasized that any validators engaging in such malicious behavior would be permanently excluded and have their stake revoked.
Ongoing Efforts and Future Implications
Tim Garcia, Solana Validator Relations Lead, confirmed that the foundation would continue its enforcement efforts to detect and eliminate operators participating in sandwich attacks. Mert Mumtaz, co-founder of Solana RPC provider Helius, explained that while Solana’s design aims to prevent these attacks, some actors have modified their validators to enable them. He suggested that other stake pools might adopt similar policies against sandwich attacks in the future.
Conclusion
The record number of sandwich attacks on BNB Chain highlights a critical vulnerability within the DeFi space, affecting thousands of traders and raising concerns about the security of decentralized exchanges. As platforms like Ethereum and Solana also grapple with similar issues, ongoing efforts to address these challenges will be crucial for restoring confidence in the market. Traders should remain vigilant and informed about these attacks to protect their investments in the ever-evolving cryptocurrency landscape.
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