The Solana Foundation has banned a group of validators enabling MEV bot operations on the network, harming users via serial sandwich attacks.
Bitcoin and Ethereum might be among the most popular blockchains. Still, they don’t function the same way regarding transaction processing.
In Bitcoin, if you send a transaction a second earlier, your transaction will be posted in the next available block as long as you have paid the required network fee.
When “Money Talks,” Retailers Suffer From MEV Bots
Things change when you decide to transact on Ethereum or Solana. Here’s “money talks,” quite literally.
There is no canonical transaction ordering like in Bitcoin or Cardano, and you only have to pay more if you want your transaction to get processed faster.
Time is money, and it can mean big losses, especially if you want to get in early on a potent meme coin.
For example, suppose you picked out BONK when the meme coin was listed on Raydium. Since it was trading in cents, you might have had a chance to own 20% of the total supply.
However, because you chose the usual “passive” way, as any other ordinary trader would, you were front-jumped by a maximal extraction value (MEV) bot—a missed opportunity.
The bot’s deployer paid a higher fee and, thus, bought all the tokens you had planned to acquire.
This unfairly means that, even if you were the first to pick the token out of thousands, the MEV bot would “sandwich” your order, ensuring you get in at the worst possible price.
This is the state of affairs in Ethereum, Solana, and all smart contract platforms that prioritize fees over time in transaction processing.
Every day, MEV bots rack in hundreds of thousands, if not millions, in value by jumping ahead of all others since they pay a higher fee to willing validators.
So much of it is vol bots to lure retail into scam tokens and malicious MEV
On any given day just go to the highest Vol token onchain, u will see what's happening:$RNT – 226M vol in 24H
$125M (More than 50%) is 2 wallets who scammed $1.6M from retail, IN JUST 1 TOKEN https://t.co/rPhtkRnfiS pic.twitter.com/Ixtru0Oyon— Wazz (@WazzCrypto) June 9, 2024
When they do this, prices rise, as in the case of meme coins.
When this happens, you must either cancel the transaction or pay a higher price. If you choose the latter, the bot can exit and pocket the difference, capturing value.
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Solana Foundation Strikes Out Validators Enabling MEV Bots
It is a problem that Ethereum and Solana developers are aware of, but the Solana Foundation is now taking steps to curb the vice.
Yesterday, the Solana Foundation acted against several validators by removing them from its delegation problem.
The reason? They were involved in “sandwich attacks,” essentially robbing Solana users by enabling MEV bots.
MEV bots jeopardize fairness in transaction processing, especially in public ledgers like Solana. In extreme cases, this activity (while not illegal) even incentivizes validators to engage in censorship or double-spending transactions.
Tim Garcia, the Solana validator relations lead, said the decision to remove these validators from the delegation program was final.
This ban, however, means they will continue as validators but will not receive SOL from the Solana Foundation as part of their subsidy program.
Clipping them is reputational damage, and these validators will have to invest more resources to win SOL block rewards.
Of note is that the crackdown is when there is a spike in MEV-related revenue on Solana amid the meme coin boom.
To quantify, in May, Solana validators surpassed their Ethereum counterparts in MEV earnings, highlighting the network’s vulnerability to such attacks.
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Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
