Bad Sandwich: DeFi Trader ‘Poisons’ Front-Running Miners for $250K Profit

Front-running Ethereum miners are suffering from a bout of food poisoning.

Maximal Extractable Value (MEV) – the practice of manipulating a transaction queue to squeeze profits from other unsuspecting traders – is making a hot splash in Ethereum’s decentralized finance (DeFi) markets. But players in the know aren’t always as safe as they might think, as evidenced by one trader who netted 130 ETH (-4.98%)

Friday, bot trader and LocalCoin Swap CTO Nathan Worsley released two token contracts named “Salmonella” and “Listeria” on the Ethereum blockchain with the intention of luring unsuspecting bot traders into an ambush. Mining pool Ethermine – which only publicly announced its MEV strategy last Wednesday – became entangled in the token trap, netting Worsley a quarter-million dollars after a few hours’ work.

Ethermine, Worsley and other MEV trailers are playing the blockchain equivalent of high-frequency trading (HFT) strategies that recently came into the public spotlight with the Robinhood, r/WallStreetBets and Melvin Capital spectacle.

Trades on decentralized exchanges (DEX) are sitting ducks while they remain idle in the processing queue. A small cohort of developers can and do take advantage of this lag time between hitting the trade button and the trade executing on-chain by front-running, back-running or, in this case, “sandwiching” a transaction.