Sandwich bots have emerged as the frontrunners of newly-issued tokens such as pepe (PEPE) and chad (CHAD), which are memecoins with no intrinsic value that caught the attention of Crypto Twitter degens almost overnight. These bots are taking advantage of a sandwich attack, which traps a user’s transaction between two transactions and then manipulates it to gain profits. By buying the same asset and selling tokens to the victim in the same trade for a slightly higher price, sandwich attackers are able to skim value from users, leading to a spike in gas fees and benefiting neither the network nor the user. Although sandwich attacks are not typically considered exploits, they are seen as a type of predatory behavior in crypto circles.
The gains made by sandwich bots can run into millions of dollars as they target thousands of wallets and skim a few dollars each time. One wallet, named “Jaredfromsubway.eth,” has spent over $2 million in the past week on Ethereum network fees trying to sandwich traders punting on predominantly low-cap tokens. This has driven up fees for the entire network, with each transaction on the Ethereum network costing over $10 as of Asian morning hours on Wednesday – ten times more than last week’s $1 level. Gas fees have spiked, with Jaredfromsubway.eth spending 7% of all fees on Ethereum in the past 24 hours, becoming the top spender on the network. This is ahead of fees spent by Arbitrum, a layer 2 blockchain that batches transactions on the Ethereum network, and Uniswap, the most-used decentralized exchange. It is unclear how much Jaredfromsubway.eth made from their frontrunning actions, but given they spent a significant amount – and continue to do so – the gains likely exceed costs by a significant amount.
In the meantime, the pepe frenzy is in full force, with pepe tokens nearly doubling in the past 24 hours as Crypto Twitter traders moved over their doge-themed token obsession to bet on the internet meme instead. Scores of pepe wannabes have popped up, as have chad, wojak, and babypepe – each a nod to internet memes. However, most of these are unlikely to last beyond a few weeks. Unlike them, entities like Jaredlikesubway.eth are eating the gains while fresh.
The rise of sandwich bots is a reminder of the importance of security in the crypto space. While the technology behind cryptocurrencies is designed to be secure, there are always vulnerabilities that can be exploited. In this case, sandwich attacks are taking advantage of the fact that transactions on the Ethereum network are public and can be seen by anyone. This makes it possible for sandwich bots to identify transactions that they can manipulate for profit. To protect themselves, users should be careful about the transactions they make and avoid making large transactions on the Ethereum network if possible.
As the crypto industry continues to grow and evolve, it is likely that we will see more innovative ways of exploiting vulnerabilities in the system. However, by remaining vigilant and taking steps to protect themselves, users can minimize the risk of falling victim to these attacks. Ultimately, the success of the crypto industry will depend on its ability to provide a secure and trustworthy platform for users to trade and invest in digital assets.