A cryptocurrency trading bot programmed to perform arbitrage operations made several complex moves within the Ethereum blockchain – including taking out a $200 million flash loan – to secure a profit of just $3.24.
On June 14, blockchain analytics firm Arkham Intelligence shared a summary of the bot’s movements. According to the firm, the transaction was carried out by an arbitrage bot using flash loans.
This morning, $200M worth of DAI was mined and burned by MakerDAO in the same block.
It was part of an arbitration transaction with a net profit of… $3?
Why did this happen – and what does this mean?
Details below pic.twitter.com/wWLZeC8All
—Arkham (@ArkhamIntel) June 14, 2023
The analytics company explained that the reason why the amount of Dai (ICD) borrowed was high is that MakerDAO’s “DssFlash” contract allows fee-free borrowing of any amount of DAI, with a limit of $500 million. This means that the bot can make unsecured loans as long as the lent assets are paid within the same block.
According to Arkham, the bot borrowed 200 million DAI from the decentralized finance protocol (DeFi), MakerDAO, and provided the funds to the Aave DAI marketplace. 1,349 Wrapped Ether (WETH) were then lent against the funds. The WETH was then used to buy Threshold Network (T) tokens on Curve Finance and sold on the liquidity protocol, Balancer.
With these transactions, the bot earned a total of 0.019 Ether (ETH), valued at about USD 33 at the time of the transaction. However, the transaction fees for the trade were approximately $28.76, with an additional $1 sent to the block builder. This left the bot with only $3.24 in profit.
Although the risk seemed high compared to the amount gained, a member of the community applauded to the bot saying that “win is win”. Another Twitter user said that doing all of that for a small profit shows just how bad the bear market is.
Meanwhile, not all bots work with low-profit trades. On April 20, a trader using bots made over a million dollars by sandwich attacking memecoin traders. Most of the profits came from trading memecoins like Pepe coin (PEPE) and Wojak (WOJAK).
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