DeFi trader suffers 100% slippage in sandwich attack

Arkham Intelligence reveals a transaction where the trader experienced a sandwich attack leading to a 100% slippage.

Blockchain intelligence company Arkham Intelligence revealed on Twitter today that an unidentified trader fell victim to a brutal DeFi sandwich attack, where the trader lost about $10,000 in the attack.

Victim swapped $10,000 wETH for $4 worth of XMON

According to the blockchain analytics firm, the trader wanted to swap $10,000 worth of wETH for XMON tokens and was unfortunately caught in the sandwich attack. Due to the sandwich, the trader ended up trading 6 wETH for $4 worth of XMON, losing almost 100% of his funds.

Arkham further commented that the said account was likely trying to test out an MEV contract.

Sandwich attacks becoming rampant in DeFi

Decentralized finance offers users the freedom that is otherwise lacking in traditional finance but DeFi is still in its early stages and as a result is susceptible to bad actors, leveraging its vulnerabilities to exploit users. One such attack is the sandwich attack.

In a nutshell, a sandwich attack involves “sandwiching” a user’s transactions between two transactions. These two transactions are before and after the user’s transaction, generating a loss for the user and a gain for the attacker.

In a typical sandwich attack, the bad actor identifies a target from the DEX’s mempool which is often open to all users.

When the predatory trader identifies a victim, they will then place one order just before the victim’s pending transaction (front-running) and the other trade after it (back-running).

The targeted trade will then be sandwiched between the attacker’s trade (hence its name) and if successful, the attacker will create an artificial price increase or decrease and generate profit, leaving the victim with a lot of slippage.