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Ethereum Network Under Siege: Verifier Steals Millions From MEV Bots

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As Ethereum (ETH) prepares for its highly-anticipated upgrade, now known as “Shapella,” the network has faced a new challenge in the form of malicious attacks on Miner Extractable Value (MEV) bots transactions. A network validator conducted the attack.

These aggressions have been carried out by a verifier who has invalidated legitimate transactions and replaced them with their own, resulting in significant losses for MEV bot owners. According to the report, an estimate of over $25 million as of this writing.

How This Attacker Breached Ethereum’s Network?

According to journalist Colin Wu, the attacker has been operating as a validator for 18 days and targeting a select few “top” MEV bots on the Ethereum network. The attacker has reportedly focused on pools with “low” liquidity, using MEV bots to exploit arbitrage opportunities and generate profits across decentralized finance (DeFi) protocols like Uniswap.

Per Beosin Alert, a researcher of blockchain projects on the crypto market, the perpetrator started by sending a transaction to a liquidity pool with a small amount of 0.04 WETH (a synthetic form of Ethereum’s native cryptocurrency) to see if the MEV Bot would “front-run” the transaction, referring to the practice of placing a transaction ahead of someone else’s to take advantage of the price difference.

If the MEV Bot monitors the pool and detects the hacker’s transaction, it will use its available funds to execute an arbitrage trade. Arbitrage is a trading strategy involving buying an asset on one market and selling it to another at a higher price to make a profit.

In this case, while the MEV bot uses its funds to buy the asset from the pool at a lower price and sell it on another market at a higher price, the hacker is essentially using the MEV bot’s monitoring capabilities and liquidity to carry out profitable trades and exploit the pool’s low liquidity.

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Author: Ronaldo Marquez

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