The Complexity of Crypto Trading Bots
A recent event that took place within the Ethereum blockchain has caught the attention of the crypto community. An arbitrage trading bot borrowed a whopping 200 million DAI, equivalent to $200 million, for a small profit of just $3.24. This peculiar series of trades has prompted discussion about the current state of the crypto market.
Analyzing the Bot’s Movements
Blockchain analysis firm, Arkham Intelligence, shared the details of this trade on June 14. The transaction was initiated by an arbitrage bot that leverages flash loans, which are zero-fee, uncollateralized loans that need to be repaid within the same block.
The firm further explained that the large amount borrowed from MakerDAO’s “DssFlash” contract, which allows any amount of DAI to be borrowed with a limit of $500 million, was then supplied to the AAVE DAI Market.
The Trade Strategy and Profit Margin
Following the loan, the bot borrowed 1.349 Wrapped Ether (WETH) against the funds, used it to purchase Threshold Network (T) tokens on the Curve exchange, and then sold them at the Balancer liquidity protocol.
The trade resulted in a total gain of 0.019 Ether, valued at around $33. After accounting for transaction fees of $28.76 and an additional $1 sent to the block builder, the bot was left with a profit of $3.24.
Community Reactions and Other Bot Activities
The risk associated with such high-value transactions for minimal gain has elicited varied responses. Some community members have praised the bot’s operations, adhering to the notion that “profit is profit”, while others point to this event as a clear sign of the bear market’s severity.
Notably, not all bots are performing low-profit trades. In April, a bot operator made over $1 million in profits through sandwich attacks on memecoin traders. The majority of these profits came from trading activity with memecoins such as Pepe (PEPE) and Wojak (WOJAK).
