A successful Maximum Extractable Value (MEV) bot known as 0xbadc0de was the victim of a 1,100 ETH hack yesterday in a fun display of on-chain karma.
MEV bots are smart contracts that monitor upcoming blockchain transactions and aim to profit from the results.
For example, if a user trades tokens across the liquidity pools of a decentralized exchange, the price of the tokens on the exchange will be affected, potentially creating an arbitrage opportunity that can be spotted by a bot.
This is exactly what happened in the hours leading up to the theft when an unlucky user tried to trade something cUSDC valued at $1.85 million to USDC via an illiquid pool for only $500. 0xbadc0de then took advantage of the imbalance and cleared 800 ETH (~$1 million) via a complex automated arbitrage trade involving multiple DeFi platforms.
However, another user had his eye on 0xbadc0de’s gains. An hour after the example above, all ETH from the MEV bot contract was transferred to the attacker’s address.
According to MEV expert Bert Miller, the code from 0xbadc0de was not adequately protected against other contractsand the attacker was able to authorize his own address to transfer 0xbadc0de’s ETH tokens.
An on-chain message was then sent via transaction input data from the bot’s operator to the attacker, requesting that the money be refunded and a 10% bonus offered.
Read more: Explains: Why Hackers Keep Exploiting Cross-Blockchain Bridges
MEV bots, also known as seekers, are a divisive feature of blockchain-based DeFi. As they act as automated arbitrageurs, balancing prices across decentralized exchanges, they benefit Manipulation and front running tradesoften at significant cost to ordinary users, has led to a predatory reputation.
Given the trade they run, 0xbadc0de’s demand for the return of funds appears to be quite high and many DeFi users have taken the incident as a prime example of “what goes around comes around”.
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