USDC exchanged for USDT lost $215,000 when it was clipped. How did MEV attack stablecoin transactions?

Original title: Crypto trader gets sandwich attacked in stablecoin swap, loses $215K

Author:Brayden Lindrea , Cointelegraph Author

Compiled by: ChatGPT

Editor's Note: This article reports a sandwich attack that took place in cryptocurrency trading, where a trader lost more than $215,000 when exchanging stablecoins. The article describes the attack process in detail, including how MEV robots make money through pre-transactions and explores possible money laundering behaviors. At the same time, the article also mentioned the protection measures taken by the Uniswap platform to prevent such attacks and clarified the initial criticism.

The following is the original content (to facilitate reading comprehension, the original content has been compiled):

On March 12, a crypto trader was a victim of a sandwich attack while making a $220,764 stablecoin transfer, losing almost 98% of its value to as much as $215,000, which were acquired by MEV robots.

The USDC stablecoin worth $220,764 was converted to a USD5,271 Tether USDT in 8 seconds, as the MEV robot successfully traded and made more than $215,500 from it.

Data from the Ethereum Block Browser shows that the MEV attack occurred in the USDC-USDT liquidity pool of decentralized exchange Uniswap v3, which locks in assets worth $19.8 million.

Details of sandwich attack deals: Etherscan

According to Michael Nadeau, the founder of The DeFi Report, the MEV robot pre-trades by swapping all USDC liquidity out of the USDC-USDT pool of Uniswap v3 and then putting it back after the transaction is executed.

Nadeau said the attackers paid $200,000 in tips to Ethereum block builder "bob-the-builder.eth" from a $220,764 transaction and made a profit of $8,000 on their own.

DeFi researcher DeFiac speculated that the same trader using different wallets might have encountered six sandwich attacks in total, citing "internal tools" as a basis. They noted that all funds came from the lending agreement Aave before they were deposited into Uniswap.

Two of the wallets became victims of the MEV robot sandwich attack on March 12 at around 9 a.m. UTC time. The Ethereum wallet addresses "0xDDe…42a6D" and "0x999…1D215" were attacked by sandwiches in transactions three to four minutes ago, losing $138,838 and $128,003 respectively.

The two traders performed the same redemption in Uniswap v3's liquidity pool as traders who made $220,762 transfers.

Some speculate that these transactions may be related to money laundering.

"If you have NK illegal funds, you can build a deal that is very easy to get attacked by MEVs, and then send it privately to a MEV bot and have them arbitrage in a bundle," said 0xngmi, founder of the encrypted data dashboard DefiLlama. "So you can wash out all the money with a loss of nearly zero."

Although Nadeau initially criticized Uniswap, he later admitted that the deals were not from the front end of Uniswap, which had MEV protection and default slippage settings.

Nadeau retracted the criticism after Uniswap CEO Hayden Adams and others clarified the protective measures Uniswap had taken to prevent sandwich attacks.