Crypto bot borrows $200m for a $3 profit

In the throes of a bear market, a crypto trading bot wagered $200 million to pocket a $3.24 profit.

A high-stakes play for such a low return might leave you scratching your head, but in the labyrinthine world of cryptocurrencies, there’s a method to the madness.

Blockchain analysis firm Arkham Intelligence recently shed light on a transaction orchestrated by a crypto arbitrage bot, an autonomous software program designed to profit from price differences between markets. 

The bot borrowed a staggering $200 million from decentralized finance (DeFi) protocol MakerDAO to make a series of complex trades, only to gain a $3.24 profit. 

But why? Let’s simmer down and break down the bot’s modus operandi.

The million-dollar move

The bot’s move begins with MakerDAO’s “DssFlash” contract. This contract allows uncollateralized borrowing of any amount of DAI (a stablecoin pegged to the USD), up to a limit of $500 million, as long as the loans are repaid within the same block. 

The bot seized this opportunity to borrow 200 million DAI, which was then supplied to the aave DAI market.

After the bot received the loan, it borrowed 1.349 wrapped ether (WETH), a token equivalent to ether (ETH), but compatible with the ERC-20 protocol. 

The bot then used this borrowed WETH to purchase threshold network (T) tokens on the Curve Finance exchange. The T tokens were then sold on the liquidity protocol, Balancer.

After all these transactions, the bot’s profit stood at 0.019 ETH, valued at around $33 at the time. 

However, subtracting the transaction fees of roughly $28.76 and an additional $1 sent to the block builder, the bot’s profit dwindled to a mere $3.24.

Revisiting the community

Opinions emerged from the crypto community, painting a picture of bemusement and admiration. 

A user on Twitter expressed their view of the current market downturn with a pithy comment: “bear market so bad someone arbitrage $200m for $3 profit “.

Meanwhile, another user nodded to the unyielding grind of the bot, acknowledging the hard-fought profit, however small, with a simple salute: “got to respect the grind”.

A brave new world

Whether you view it as an absurd stunt or a testament to the cutthroat competition of the crypto trading world, one thing is clear: in the fast-paced and complex universe of cryptocurrencies, even seemingly bizarre moves can have their own twisted logic.