Fun

Rogue Validator Exploits MEV Bots on Ethereum, Resulting in $25.3M in Crypto Losses

News Feed - 2023-04-04 11:04:17

Rogue Validator Exploits MEV Bots on Ethereum, Resulting in $25.3M in Crypto Losses


On April 3, 2023, at Ethereum block height 16,964,664, a group of MEV (Maximal Extractable Value) bots were exploited for $25.3 million. An analysis of the exploit revealed that a renegade validator switched the MEV bots’ transactions and seized various crypto tokens, such as 7,460 wrapped ether and 64 wrapped bitcoin. While the Mechanisms Behind MEV Bots Boost Profit, They Also Have Vulnerability to Exploits


Recently, crypto proponents and security experts have been discussing how a group of MEV bots lost $25.3 million in a sophisticated exploit. The attacker used a transaction manipulation tactic that enabled the rogue validator to replace several MEV transactions, resulting in the loss of a significant amount of WBTC, USDC, USDT, DAI, and WETH.


MEV, also known as “Maximal Extractable Value” bots or flashbots, are automated software programs that use Ethereum’s blockchain to profit from transaction execution. MEV bots have various uses, such as executing trades ahead of other traders, known as front-running, and discovering arbitrage and liquidation opportunities.


In this case, the rogue validator employed a “sandwich attack,” which is a type of transaction manipulation tactic utilized by MEV bots on Ethereum. Interestingly, the renegade validator became an Ethereum validator on March 16, 2023, a little over two weeks before the exploit took place.


“In this incident, a rogue validator appears to have broken the “gentleman’s agreement” whereby Flashbot validators ignored the fact that penalties for malicious behavior were in many cases inadequate to economically disincentivize it,” Certik, a Web3 and blockchain auditing and security firm told Bitcoin.com News in a note on Monday.


“In total, the rogue validator was able to replace MEV transactions worth $25.3 million,” Certik added. “The irony of MEV bots falling victim to a scheme like this is unlikely to earn them much sympathy from the general public, who tends to be the victim of their value extraction. Still, this incident highlights the dangers of centralized systems, where an agreement to play by the rules can be just as easily revoked as it was given.”


Certik further reports that $1.82 million in WBTC, $5.29 million in USDC, $3 million in USDT, $1.7 million in DAI, and $13.52 million worth of wrapped bitcoin (WBTC) was taken in the exploit. MEV bots or Flashbots can generate significant profits for their operators, but they have also raised concerns within the Ethereum ecosystem over fairness and censorship. Tags in this story Arbitrage, Auditing, Bitcoin.com News, Blockchain, centralized systems, certik, crypto tokens, Cryptocurrency, DAI, Ethereum, Exploit, Flashbots, front-running, gentleman"s agreement, Liquidation, Maximal Extractable Value, MEV bots, Profit, public opinion, risks, rogue validator, Security, transaction manipulation, USDC, USDT, value extraction, Vulnerability, WBTC, Web3, WETH


What do you think the future holds for MEV bots in light of this exploit, and how can their risks be mitigated? Share your thoughts about this subject in the comments section below. Jamie Redman


Jamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 6,000 articles for Bitcoin.com News about the disruptive protocols emerging today. P2P Bitcoin Exchange Paxful Suspends Marketplace With Uncertainty of Return NEWS | 2 hours ago ‘Totally Irresponsible’ — Bitcoin Proponents Express Discontent Over Twitter"s Doge Logo Change NEWS | 6 hours ago


Image Credits: Shutterstock, Pixabay, Wiki Commons Previous articleOKX Wallet is First in Web3 to Utilize Leading-Edge MPC Technology Together With Support of 37 Blockchains Next articleBiggest Movers: DOGE up 30%, Following Twitter Logo Change Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article. Read disclaimerShow comments More Popular NewsIn Case You Missed ItCentral Bank of Brazil Confirms It Will Run a Pilot Test for Its CBDC This Year


The Central Bank of Brazil has confirmed that the institution will run a pilot test regarding the implementation of its proposed central bank digital currency (CBDC), the digital real. Roberto Campos Neto, president of the bank, also stated that this ... read more.NFT Sales Volume Saw a Small Uptick This Week — Moonbirds, Mutant Apes Take Top Sales SEC Risks Violating Admin Procedure Act by Rejecting Spot Bitcoin ETFs, Says Grayscale Australia to List Bitcoin ETF After 4 Clearinghouse Participants Commit to Meet Stringent Margin Terms Interest in Real Estate Investments in Spain Grew 400%, With Some Using Crypto and Stocks as Payment Method

News Feed

Cointelegraph Research7 hours agoCrypto VC inflows drop further as macro factors weigh on investmentsPolychain Capital and CoinFund launch new funds, and spot Bitcoin ETFs approval rumors can’t brighten the outlook for
Helen Partz12 hours agoUkraine demands local crypto businesses provide financialsTrading volumes on the Ukrainian crypto exchange Kuna have shrunk 90% since March 2023 due to government policies, the CEO said.2296 Total
Savannah Fortis10 hours agoChinese AI chip market finds expansion paths despite US export restrictionsThe U.S. imposed export restrictions on high-level AI chips to China in October 2022, but Chinese companies are findin
Bitcoin Decline Continues: Is $86,800 The Level To Watch?
Este artículo también está disponible en español. On-chain data shows the Realized Price of the Bitcoin short-term holders lies at $86,800 right now, making the level one
Bitcoin’s ‘up only’ rally creating around 1.5K crypto millionaires daily — Data
Nancy Lubale4 hours agoBitcoin’s ‘up only’ rally creating around 1.5K crypto millionaires daily — DataBTC’s consecutive all-time highs are printing thousands of new millionaires, industry data shows.2224 Total
Prashant Jha4 hours agoSushi to test Bitcoin swaps and Opyn DeFi protocol founders cave to CFTC pressure: Finance RedefinedSushi is set to test Bitcoin swaps on 30 different blockchains using the interpretability protoco
$2.7 Billion in NFT Sales Recorded Last Month — Ethereum, Ronin, Solana Top 3 NFT Networks
$2.7 Billion in NFT Sales Recorded Last Month — Ethereum, Ronin, Solana Top 3 NFT Networks This week Google Trends shows that the acronym NFT, which stands for non-fungible token
Tesla CEO Elon Musk Confirms He’ll Keep Buying and Supporting Dogecoin
Tesla CEO Elon Musk Confirms He"ll Keep Buying and Supporting Dogecoin Tesla and Spacex CEO Elon Musk has reaffirmed his commitment to dogecoin (DOGE). He confirms that he will kee
Prashant Jha13 hours agoFBI flags 6 Bitcoin wallets linked to North Korea, urges vigilance in crypto firmsAlthough the likes of Lazarus Group have stolen billions of dollars worth of crypto, the public ledger technology
Spanish Crypto Exchange Bit2me Won’t Absorb 2gether Customers Due to Internal Discrepancies
Spanish Crypto Exchange Bit2me Won"t Absorb 2gether Customers Due to Internal Discrepancies Bit2me, a Spanish cryptocurrency exchange, announced that the deal it aimed to complete
Ruling Party Sources Deny Plan to Levy 40% Tax on Crypto Yields in Turkey
Ruling Party Sources Deny Plan to Levy 40% Tax on Crypto Yields in Turkey The government in Turkey does not intend to impose a 40-percent levy on crypto-related gains as has been a
Bitcoin to Reach $100K to $288K in 2021? Stock-to-Flow Models Suggest It Could
Bitcoin to Reach $100K to $288K in 2021? Stock-to-Flow Models Suggest It Could The creator of the notorious stock-to-flow model (S2F), Plan B has recently detail