A recent incident in the crypto world highlighted the vulnerabilities affecting traders, especially those executing large transactions. A trader swapped $733,000 worth of USDC and received only $19,000 USDT due to a sandwich attack perpetrated by a cunning ‘sandwich artist’.

The attack exploited the mechanics of automated market makers (AMMs) and leveraged the transparency of blockchain transactions. The assailant strategically timed their transactions to capitalize on the trader’s large order, leading to a significant financial loss.

The Attack Steps

The operation involved two main phases:

1. The attacker executed a “frontrun” transaction right before the victim’s trade, artificially inflating the token’s price.
2. Following this, a “backrun” transaction was placed to sell the acquired tokens at the inflated price, resulting in a profit of approximately $714,000 for the attacker.

Crypto Attack
(Source: Etherscan)

The sandwich attack takes advantage of the mempool’s transparency, allowing attackers to observe pending transactions and execute their trades efficiently.

How to Prevent Such Attacks

Traders can mitigate risks by adjusting slippage tolerances or using private mempools when making large trades. Some DeFi platforms are also developing anti-frontrunning mechanisms and dynamic slippage adjustments, although these solutions are still being refined.

Sandwich attacks reveal the ongoing challenges in the evolving world of cryptocurrency trading, urging traders to adapt their strategies continually.