MEV bots raked in millions: In a major blockchain transaction on the Solana network, a Maximum Extractable Value (MEV) bot has been able to execute a transaction that raked in $1.7 million from a singular, dubious trade for the memecoin Dogwifhat (WIF). This happened when a trader executed an $8.9 million acquisition of WIF in an inefficient manner.

Managed by 2fast, the MEV bot executed a sequence wherein it exchanged 703 Solana (SOL) tokens, valued at $98 each, for 490,000 WIF tokens. Almost immediately, the bot then converted these WIF tokens back into 19,035 SOL tokens within a single transaction bundle, thereby realising a profit of $1.73 million, as indicated by data from Solscan.

What are MEV bots?

MEV bots are algorithmic entities that scrutinise blockchain ecosystems to detect and exploit profitable trading prospects automatically. In this instance, the bot used a tool developed by Jito Labs, an entity associated with the Solana liquid staking protocol Jito. This tool facilitates the identification of maximum extractable value, akin to the functionalities offered by flash bots on the Ethereum network.

The opportunity for this arbitrage materialised following a considerable trade executed by an entity identified as zeroxtrading.sol. The trader's acquisition of WIF tokens, conducted within a low-liquidity environment, resulted in a transaction where each WIF token was priced at approximately $3—roughly 1,400 per cent higher than its then market rate. Consequently, the trader incurred an immediate loss, facing a depletion of 92 per cent of their investment.

Pseudonymous developer Pland elucidated in a statement on X (previously known as Twitter) that the MEV bot employed a relatively straightforward backrunning strategy to exploit the inefficiencies inherent in the trader's execution of the WIF purchase. Notably, backrunning is perceived as a less detrimental activity to blockchain ecosystems, as it focuses solely on exploiting arbitrage opportunities without adversely affecting the initial transaction.

Contrastingly, more malicious tactics such as "sandwich" attacks aim to manipulate the pricing of initial bids, thereby detrimentally impacting blockchain participants. Following this significant transaction, the value of WIF momentarily surged to $4. Despite the trader's substantial financial setback, subsequent market activity witnessed a renewed interest in WIF, with the memecoin registering a 50 per cent increase in valuation subsequent to the abrupt decline.