Dive into the world of cryptocurrency, moves that profit some and cost others, and the inherent complexities involved in digital finance. This piece explores the intricacies of Solana (SOL), a cryptocurrency network noted for its high maintenance costs. The narrative unfolds from the perspective of DeezNode, a Solana validator, who managed to amass over $13 million in a single month through a technique called sandwich attacks – as a reported study uncovers.
# Exploring DeezNode’s Profits in Solana’s Network
In December 2024, DeezNode’s sandwich bot pulled off 1.55 million transactions, according to vitorpy, the founder of DarkLake. This spree of activity allowed DeezNode to profit by 65,800 SOL, which amounted to over $13 million at the time of vitorpy sharing this information.
Projected annually, this exploitative method could translate into approximately 801,540 SOL extracted from users, a sum that corresponds to an estimated $163.4 million.
This incident underscores the issues created through what was originally envisioned as a solution to the MEV-abuse problem – shutting down Jito’s public mempool. Ironically, this act aggravated the problem by pushing extraction to private networks, such as the one controlled by DeezNode, leading to increased exploitation speeds.
## What Constitutes Sandwich Attacks on Solana?
Sandwich attacks are essentially a harmful tactic used in decentralized exchanges (DEXes), where the attacker manipulates users’ transactions for their benefit. Solana’s version involves bad actors exploiting transaction orders to profit at the expense of typical users. This manipulation ensures the user obtains the asset at the worst price while the attacker reaps the benefits.
The individuals behind these attacks, usually validators or those with access to private mempools, coordinate their actions so that two transactions surround a user’s transaction: one purchasing the asset at a lower price and the other selling it at a higher price. This positioning “sandwiches” the user’s transaction.
These tactics disadvantage regular users, pushing their transaction costs higher and undermining the fairness of the trading environment. Only a handful of validators, those controlling the transaction order in Solana’s leader-based block production system, benefit.
What makes Solana especially susceptible to such attacks is its infrastructure. The high-speed transaction processing and the absence of an in-protocol mempool are particularly conducive to such tactics. Some validators or RPC service providers resort to using private mempools to see and manipulate transactions before they go through, resulting in considerable MEV revenue for these validators.
Additionally, Solana’s design makes it challenging for external observers to detect MEV strategies like sandwich attacks. This issue raises concerns about data obscurity and the actual source of Solana’s Real Economic Value (REV).
REV often acts as a selling point for SOL enthusiasts, setting Solana apart from competitors like Ethereum (ETH). Nevertheless, Mert—the CEO of Helius Labs, Solana’s largest RPC provider—stated that sandwich attacks make up only a small portion of the chain’s REV.
Traders, investors, and cryptocurrency enthusiasts are closely observing this issue, discussing potential solutions to the MEV sandwiching attacks. Other blockchains, including MultiversX (EGLD), BNB Chain (BNB), Algorand (ALGO), and Cardano (ADA), are actively exploring methods to prevent such exploits.
Why is Solana Attractive to Validators for Sandwich Attacks?
Solana’s high-speed transaction processing, absence of an in-protocol mempool, and leader-based block production system allows validators to manipulate transaction orders for significant revenue. This infrastructure makes it especially susceptible to sandwich attacks, often at the expense of regular users.
How Do Sandwich Attacks Impact Solana Users?
Regular users bear the brunt of sandwich attacks. These tactics result in users purchasing assets at higher prices while validators make a profit. The practice also increases transaction costs, undermines the fairness of the trading environment, and possibly dents users’ trust in the Solana network.
What are Some Potential Solutions to MEV Sandwich Attacks?
There are ongoing discussions among traders, investors, and cryptocurrency enthusiasts about how to mitigate MEV sandwich attacks. Potential solutions may lie in restructuring the transaction processing system, improving data transparency, and creating an in-protocol mempool. Other blockchains like MultiversX (EGLD), BNB Chain (BNB), Algorand (ALGO), and Cardano (ADA) are also exploring strategies to prevent such exploits.
By leaning into a comprehensive understanding of Fantom, its core technology, and potential market positioning, this guide brings readers valuable insights to help make informed decisions on their cryptocurrency investments.
