What is a MEV bot and why you should care

1- MEV: Maximal Extractable ValueBlock producers ( validators ) have the right to order txns in a blockReordering txns can result in profit with front running, arbitrage or sandwich attacks

Sandwich attacks are easy to understand so let me explain with an example.U place an order on Sushiswap to buy $1000 in ETH with USDC. The price is $1500. you set a slippage tolerance of 2%, meaning you willing to pay up to $1530 per Eth .

A market actor (Bot) buy $1000 of eth at the price of $1500 before you, let him drive the price up to your max $1530 price, and sell it back to the liquidity pool, this way it make $20 minus gas fees in profit

The block's validator has to send the bots 2 txns directly before and directly after your 1k buy for the profit to be guaranteed, and the bot has to pay the validator for the ordering.

2-Why MEV can be a problem?

While arbitrage is a typical, healthy market activity, MEV bots can steal other users' opportunities by keeping an eye on the transaction mempool and replicating trades, all while paying block producers a higher fee to have their transactions included in place of the original arbitrage transaction, Users who are sandwiched face increased slippage and worse execution on their trades.

Generalized frontrunners and the gas-price auctions they frequently participate in cause network congestion and high gas prices for everyone else attempting to conduct routine transactions at the network layer. MEV can have negative impacts between blocks in addition to what occurs within those blocks. Validators may be motivated to reorg blocks in order to take the MEV for themselves if the MEV offered in a block significantly exceeds the regular block reward, leading to blockchain reorganization and unstable consensus. (https://ethereum.org/en/developers/docs/mev/)

3-MEV a juicy business and hidden tax for users:


Total Extracted MEV: $691,189,664

Last 30 days Extracted MEV: $2,247,313

Last 24h Extracted MEV:$79k

how prevent yourself from getting sandwiched :

The easiest way to prevent getting sandwiched is to place a limit order in a DEXs where it's possible ,setting a low slippage or just using a CEX.

Last hour user losses

There’s big money involved in this game. For example, Alameda Research, was a running MEV strategies .Wintermute, a London firm that trades about billions worth of digital assets a month, has an active MEV operation and many more other big entities.