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A cryptocurrency trading bot programmed to execute arbitrage trades performed various complex actions on the Ethereum blockchain, including taking out an instant loan of $200 million, all for a profit of just $3.24.
On June 14, analytics firm Arkham Intelligence shared a breakdown of the bot’s movements. According to the firm, the transaction was made by an arbitrage bot using quick loans.
This morning, $200M worth of DAI was minted and burned by MakerDAO in the same block.
It was part of an arbitrage 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 firm explained that the reason the DAI borrowing amount was high is because MakerDAO’s “DssFlash” contract allows zero-fee borrowing of any amount of DAI, up to a $500 million limit. This means that the bot can issue unsecured loans if the loan assets are paid within the same block.
According to Arkham, the bot borrowed 200 million DAI (DAI) from decentralized finance (DeFi) protocol MakerDAO and then provided the funds to the AAVE DAI marketplace. After that, 1,349 Wrapped Ether (WETH) was borrowed against funds. WETH was then used to buy Threshold Network (T) tokens on the Curve exchange and was sold on the Balancer liquidity protocol.
Through these transactions, the bot received a total of 0.019 Ether (ETH), which was valued at approximately $33 at the time of the transaction. However, the transaction fee was around $28.76 and an extra dollar was sent to the block creator. As a result, the bot received only $3.24 in profit.
Related: Sandwich trading bots lose bread and butter in $25M exploit
Although the risk seemed high compared to the amount received, a member of the community applauded the bot, saying that “profit is profit.” Meanwhile, a Twitter user said doing all this for a small profit shows just how bad a bear market is.
That being said, not all bots operate on low-profit trades. On April 20, the bot operator made over $1 million using sandwich attacks on memcoin traders. Most of the profits have come from targeting the trading activity of memcoins such as Pepe (PEPE) and Wojak (WOJAK).