In the context of the increasingly popular Block chain technology, the Cryptocurrency exchange ecosystem is also rapidly expanding. Decentralization exchange (DEX) has become an important platform for digital asset trading due to its advantages of disintermediation and transparency. With the maturity of the market, various automated trading tools have emerged. MEV (maximal extractable value) robots are automated programs used to execute strategies and other trading strategies on the Block chain network. They extract the maximum value by rearranging, inserting, or delaying Block chain transactions. This article will analyze in depth the definition, principles, implementation methods, determining factors, and optimization directions of MEV robots.
With the development of technology and market demand, the clamp robot has also evolved into various types to adapt to different trading environments and strategy requirements. The following are several common types of clamp robots:
01, Sandwich Clamp Robot
This type of robot listens to large orders in the transaction pool and submits transactions with higher gas fees before these orders are officially put on the chain, thus completing the transaction before the user. This strategy involves inserting transactions before and after the target transaction (front-running and back-running) to manipulate prices and profit from them.
02, Brick-lifting Robot
This type of clamp robot focuses on profiting from price differences between DEX. It buys assets at a low price on one exchange and sells them at a high price on another exchange to generate profits. This strategy typically requires the robot to quickly identify price changes between different exchanges and execute trades promptly.
03, New Token Release Robot
This type of robot focuses on the price fluctuations when new tokens are issued. In the early stage of the DEX launch, the price of new tokens is usually unstable and fluctuates greatly. The snatcher robot will quickly buy in when the token is just launched, and sell after the price rises to make a profit from the price difference. This type of robot requires a high degree of attention to the release dynamics of new projects and the ability to place orders quickly.
04、Liquidity pool arbitrage robot
Liquidity pool arbitrage bots make profits by transferring assets between different liquidity pools. It will look for price differences in different pools and perform liquidity provision and withdrawal operations to achieve profits. This requires the bot to efficiently manage liquidity and respond quickly to price changes within the pools.
05, Lightning Loan Arbitrage Robot
The Flash Loan arbitrage bot utilizes the characteristics of Flash Loans to conduct transactions. Flash Loans allow users to borrow a large amount of funds in a single transaction without collateral. The bot can manipulate market prices in a short period of time using these funds to achieve arbitrage. For example, it can use Flash Loans to drive up prices in one pool and then profit from another pool.
06, Triangular Arbitrage Bot
Triangular arbitrage involves trading between three different token pairs to take advantage of exchange rate differences. For example, profit is realized by trading A/B, B/C, and then C/A in a cycle. This type of bot requires complex calculations and fast trading execution capabilities.
This article mainly analyzes the sandwich robot with everyone.
One, Sandwich Clip Robot
The Sandwich Robot is an automated trading tool specifically designed to profit from Decentralization exchange through front-running. It achieves this by quickly capturing on-chain trading opportunities and trading before or after the target trade is placed, thus earning the price difference. The core of the Sandwich Robot lies in seizing trading opportunities with high efficiency and speed.
The principle of the sandwich robot
Profitable operation of the sandwich clip robot is based on the following basic principles:
Front running: Before other users' buy orders are submitted but have not been packaged into Blocks by miners, the robot buys the target token at a lower price. When the user's order is executed and the price is pushed up, the robot quickly sells to profit from the price difference.
Front-running: The robot sells at a higher price before other users sell tokens. When the user's sell order lowers the price, the robot buys back at a lower price, thus making a profit.
The so-called sandwich, is to clip the trading users, to earn the price difference. The success of the sandwich robot depends on the accurate grasp of the trading opportunity and the high priority of trading execution.
Three, Implementation Ideas
Real-time transaction monitoring:
Connect to the blockchain node using WebSocket to listen for pending transactions to be mined.
Filter target trades by comparison
transaction.to
Or
transaction.from
Field, identifying trades related to the target DEX.
Filtering and Sorting
Filter out transactions unrelated to the strategy and transactions from its own address to prevent the death loop caused by self-trading.
Dynamically adjust Gas prices
Set a higher gas price manually to prioritize the processing of robot transactions by miners and execute them before regular users.
4、Decode transaction data
Decode the transaction data using a smart contract interface (such as Interface in ethers.js) to determine the tokens and amounts involved in the transaction.
According to the decoding information, choose the appropriate contract invocation method, for example
swapExactETHForTokens or swapTokensForExactTokens.
Four, Code Ideas
Selected the wss provided by ZAN's node service. If you don't know how to create it, you can find the complete tutorial in this document (implemented with ethers.js)
Create a listening ws service
const ZAN_WSS_URL = wss://api.zan.top/node/ws/v1/eth/mainnet/${YOUR_KEY} const ZANWssProvider = new ethers.providers.WebSocketProvider(ZAN_WSS_URL); ZANWssProvider.on('pending', (tx) => { // TODO })
const iface = new ethers.utils.Interface(abi) const result = iface.decodeFunctionData('swapExactETHForTokens', transaction.data)
Five, Determining Factors
The effectiveness and success of the clip robot are closely related to a variety of factors:
Transaction Speed:
Network latency and node response speed will directly affect the response time of the robot. Using high-performance node services (such as ZAN, Infura, Alchemy) can reduce latency, and ZAN also provides support for independent nodes.
2、Gas fee:
When competing for transaction priority, Gas fees are an important consideration. Excessive Gas fees can eat into profits, so it is necessary to find a balance between speed and cost.
Market liquidity:
High liquidity helps to execute large trades quickly without significantly affecting market prices. Insufficient liquidity may lead to increased slippage or failed trades.
Contract Security:
The security of the target contract is directly related to the risk of strategy operation. The robot needs to have the basic verification capability for the contract code to avoid malicious contract exploitation in trading, and can use the ZAN contract audit capability to conduct risk screening for the target contract().
Competitive Environment:
There may be multiple arbitrage bots competing for profit opportunities in the market. During intense competition, the success rate and profit of trades may be affected.
Conclusion
MEV robots provide an efficient solution for arbitrage in Decentralization exchanges. With real-time analysis and fast execution, they can gain advantages in the market. However, robot arbitrage also faces challenges of high competition and high risk. Investors need to consider technology implementation, risk control, and market strategies comprehensively to remain competitive in the ever-changing Cryptocurrency market. In the future, with technological advancements and the expansion of the DeFi ecosystem, robot arbitrage is expected to unleash its potential in more industries, creating more value for users.
This article is written by KenLee from ZAN Team (X account @zan_team). The content of the article is for technical sharing only and does not constitute any investment advice.
This article is authorized for reprint from: "PaNews"
Original author: ZAN Team
『Let encryption transactions be automated! Understand MEV robots in five minutes, and you can write one too』 This article was first published in the 'encryption city'.
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The content is for reference only, not a solicitation or offer. No investment, tax, or legal advice provided. See Disclaimer for more risks disclosure.
Let encryption transactions be automated! Understand MEV robots in five minutes, and you can also write one
In the context of the increasingly popular Block chain technology, the Cryptocurrency exchange ecosystem is also rapidly expanding. Decentralization exchange (DEX) has become an important platform for digital asset trading due to its advantages of disintermediation and transparency. With the maturity of the market, various automated trading tools have emerged. MEV (maximal extractable value) robots are automated programs used to execute strategies and other trading strategies on the Block chain network. They extract the maximum value by rearranging, inserting, or delaying Block chain transactions. This article will analyze in depth the definition, principles, implementation methods, determining factors, and optimization directions of MEV robots.
With the development of technology and market demand, the clamp robot has also evolved into various types to adapt to different trading environments and strategy requirements. The following are several common types of clamp robots:
01, Sandwich Clamp Robot
This type of robot listens to large orders in the transaction pool and submits transactions with higher gas fees before these orders are officially put on the chain, thus completing the transaction before the user. This strategy involves inserting transactions before and after the target transaction (front-running and back-running) to manipulate prices and profit from them.
02, Brick-lifting Robot
This type of clamp robot focuses on profiting from price differences between DEX. It buys assets at a low price on one exchange and sells them at a high price on another exchange to generate profits. This strategy typically requires the robot to quickly identify price changes between different exchanges and execute trades promptly.
03, New Token Release Robot
This type of robot focuses on the price fluctuations when new tokens are issued. In the early stage of the DEX launch, the price of new tokens is usually unstable and fluctuates greatly. The snatcher robot will quickly buy in when the token is just launched, and sell after the price rises to make a profit from the price difference. This type of robot requires a high degree of attention to the release dynamics of new projects and the ability to place orders quickly.
04、Liquidity pool arbitrage robot
Liquidity pool arbitrage bots make profits by transferring assets between different liquidity pools. It will look for price differences in different pools and perform liquidity provision and withdrawal operations to achieve profits. This requires the bot to efficiently manage liquidity and respond quickly to price changes within the pools.
05, Lightning Loan Arbitrage Robot
The Flash Loan arbitrage bot utilizes the characteristics of Flash Loans to conduct transactions. Flash Loans allow users to borrow a large amount of funds in a single transaction without collateral. The bot can manipulate market prices in a short period of time using these funds to achieve arbitrage. For example, it can use Flash Loans to drive up prices in one pool and then profit from another pool.
06, Triangular Arbitrage Bot
Triangular arbitrage involves trading between three different token pairs to take advantage of exchange rate differences. For example, profit is realized by trading A/B, B/C, and then C/A in a cycle. This type of bot requires complex calculations and fast trading execution capabilities.
This article mainly analyzes the sandwich robot with everyone.
One, Sandwich Clip Robot
The Sandwich Robot is an automated trading tool specifically designed to profit from Decentralization exchange through front-running. It achieves this by quickly capturing on-chain trading opportunities and trading before or after the target trade is placed, thus earning the price difference. The core of the Sandwich Robot lies in seizing trading opportunities with high efficiency and speed.
The principle of the sandwich robot
Profitable operation of the sandwich clip robot is based on the following basic principles:
Front running: Before other users' buy orders are submitted but have not been packaged into Blocks by miners, the robot buys the target token at a lower price. When the user's order is executed and the price is pushed up, the robot quickly sells to profit from the price difference.
Front-running: The robot sells at a higher price before other users sell tokens. When the user's sell order lowers the price, the robot buys back at a lower price, thus making a profit.
The so-called sandwich, is to clip the trading users, to earn the price difference. The success of the sandwich robot depends on the accurate grasp of the trading opportunity and the high priority of trading execution.
Three, Implementation Ideas
Connect to the blockchain node using WebSocket to listen for pending transactions to be mined.
Filter target trades by comparison
transaction.to
Or
transaction.from
Field, identifying trades related to the target DEX.
Filter out transactions unrelated to the strategy and transactions from its own address to prevent the death loop caused by self-trading.
Set a higher gas price manually to prioritize the processing of robot transactions by miners and execute them before regular users.
4、Decode transaction data
Decode the transaction data using a smart contract interface (such as Interface in ethers.js) to determine the tokens and amounts involved in the transaction.
According to the decoding information, choose the appropriate contract invocation method, for example
swapExactETHForTokens or swapTokensForExactTokens.
Four, Code Ideas
Selected the wss provided by ZAN's node service. If you don't know how to create it, you can find the complete tutorial in this document (implemented with ethers.js)
const ZAN_WSS_URL =
wss://api.zan.top/node/ws/v1/eth/mainnet/${YOUR_KEY}const ZANWssProvider = new ethers.providers.WebSocketProvider(ZAN_WSS_URL); ZANWssProvider.on('pending', (tx) => { // TODO })ZANWssProvider.on('pending', (tx) => { if (transaction && transaction.to && transaction.to.toLowerCase() === ROUTER.toLowerCase() && transaction.from !== blackAddress) { // TODO } })
function calculate_gas_price(action, amount) { if (action === 'buy') { return amount.add(100000000) // 0.1 Gwei } else { return amount.sub(100000000) // 0.1 Gwei } }
4, decode trading method, call function
const iface = new ethers.utils.Interface(abi) const result = iface.decodeFunctionData('swapExactETHForTokens', transaction.data)
Five, Determining Factors
The effectiveness and success of the clip robot are closely related to a variety of factors:
Network latency and node response speed will directly affect the response time of the robot. Using high-performance node services (such as ZAN, Infura, Alchemy) can reduce latency, and ZAN also provides support for independent nodes.
2、Gas fee:
When competing for transaction priority, Gas fees are an important consideration. Excessive Gas fees can eat into profits, so it is necessary to find a balance between speed and cost.
High liquidity helps to execute large trades quickly without significantly affecting market prices. Insufficient liquidity may lead to increased slippage or failed trades.
The security of the target contract is directly related to the risk of strategy operation. The robot needs to have the basic verification capability for the contract code to avoid malicious contract exploitation in trading, and can use the ZAN contract audit capability to conduct risk screening for the target contract().
There may be multiple arbitrage bots competing for profit opportunities in the market. During intense competition, the success rate and profit of trades may be affected.
Conclusion
MEV robots provide an efficient solution for arbitrage in Decentralization exchanges. With real-time analysis and fast execution, they can gain advantages in the market. However, robot arbitrage also faces challenges of high competition and high risk. Investors need to consider technology implementation, risk control, and market strategies comprehensively to remain competitive in the ever-changing Cryptocurrency market. In the future, with technological advancements and the expansion of the DeFi ecosystem, robot arbitrage is expected to unleash its potential in more industries, creating more value for users.
This article is written by KenLee from ZAN Team (X account @zan_team). The content of the article is for technical sharing only and does not constitute any investment advice.
This article is authorized for reprint from: "PaNews"
Original author: ZAN Team
『Let encryption transactions be automated! Understand MEV robots in five minutes, and you can write one too』 This article was first published in the 'encryption city'.