- MEV bot “arsc” extracted $30M via MEV arbitrage on Solana.
- The arbitrage directly hurt Solana users.
- Solana has been struggling with malicious validators.
Validators are crucial to any blockchain ecosystem, ensuring that transactions on the network are fair to all participants. When validators become malicious, the consequences for network trust can be severe. Solana, which struggled with malicious validators for some time, recently imposed strict penalties on bad actors. However, the extent of the validators’ misuse of their power is just becoming apparent.
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The most recent case involved one Solana-based bot has made over $30 million at the expense of network users. What is worse, malicious validators on Solana profited directly from its trades.
Solana’s MEV Sandwich Bot Profits $30M at the Expense of Users
In the past two months, a Solana-based sandwich bot named “arsc” has made approximately $30 million at the expense of the users on the network. Ben Coverston, the founder of MRGN Research, highlighted the bot’s activities on Saturday, June 15, despite its efforts to fly under the radar.
According to Coverston, the bot profited from Maximum Extractable Value (MEV) arbitrage, which involves placing two transactions around a target transaction. Once “sandwiched,” the bot profits from the price difference between these transactions. Notably, the bot purchases tokens at a lower price and sells them at a higher price within the same transaction block.
What is worse, these types of attacks directly harm the users whose transactions are targeted in these trades. It also benefits malicious validators, who, thanks to their power to rearrange trades, are a key component of this strategy.
How Validators Profit From MEV Sandwich Bots
Because validators have the power to give priority and rearrange trades in the same block, their cooperation is essential in MEV arbitrage attacks. This is why at least some of the profits of the arsc MEV bot likely made their way to malicious Solana validators.
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While the exact way the bot works is not known, there is another similar bot, Jito Backrun Arb Bot, that is freely available on Github. This bot, which performs backrun arbitration on Solana, “specifically targeting SOL and USDC trades.”
Interestingly, the bot’s readme file clearly outlines how the entire process works and how validators profit from it. The basic structure of the transaction involves borrowing funds on Solend, executing the arbitrage using the Jupiter program, repaying the funds, and tipping the validator.
The implications of the validator “tips” are significant, as they can skew their incentives to prioritize transactions from MEV bots. This in turn leads to losses for the users whose trades the MEV bots are targeting.
On the Flipside
- The first event to highlight issues with Solana validators was a May governance vote about validator rewards. While the vote to increase validator rewards passed, the community was outraged that nothing was done about malicious validators.
- The Solana Foundation recently cut several malicious validators from its partner program. However, these validators continue to operate on the Solana Network.
Why This Matters
The MEV arbitrage bot case highlights how large players can exploit regular traders on the chain, often avoiding detection until called out by the community.
Read more about Solana Foundation taking action against bad actors:
Solana Punishes Validators for Sandwich Attacks After Backlash
Read more about the latest Solana celebrity coin controversy:
FLOCKA Memecoin Sees Rapid Rise Amid Insider Trading Concerns
