Every so often, a new method of making money in the cryptocurrency space comes up and attracts the attention of many. Sometimes, these schemes work, and within a few weeks, people have flooded the schemes making them too competitive.
But most of the time, these methods are simply scams, neatly and nicely packaged as once-in-a-lifetime opportunities to make millions, like the Ethereum MEV bot scam.
What Is an Ethereum MEV Bot?
MEV stands for Miner Extractable Value which refers to the additional profits miners can potentially make by including, excluding, or reordering transactions in the block. Therefore, an Ethereum MEV bot is a script that automates the process of identifying and exploiting MEV opportunities on the Ethereum blockchain.
The bots monitor the mempool (the mempool is where crypto transactions are held before processing) and try to identify transactions that could be manipulated to extract additional value at the expense of the initiators. They use various algorithms and strategies to detect opportunities such as arbitrage or frontrunning scenarios.
If an opportunity is discovered, they attempt to reorder the transaction to maximize profit. Once the transactions are reordered, they broadcast the modified transactions to the Ethereum network before adding them to the block.
One such manipulation is the “sandwich attack,” which involves injecting the victim’s transactions between two transactions initiated by the attacker. The transactions result in a loss to the victim and benefit to the attacker.
While MEV extraction can be lucrative, it also raises ethical concerns since it negatively impacts other users of the system. As a result, the Ethereum community has been exploring solutions such as Flashbots Bundles and Layer 2 solutions such as Arbitrum’s optimistic roll-up technology to mitigate its effects.
What Is the Ethereum MEV Bot Scam?
If you’ve been involved in the crypto industry for a while, you know how scams manipulate psychology. They take advantage of people’s greed to defraud them of their investments. The Ethereum MEV bot scam is no different.
For a start, MEV bots have been all the rage for quite some time. Most recently, a mysterious crypto expert, Jaredfromsubway’s MEV bot generated a staggering $40.6 million in revenue and $6.2 million in profits by taking advantage of traders on the Ethereum blockchain within three months.
So, what question pops into your mind when you come across such news? How does Jaredfromsubway do it, and how can I make my own MEV bot and make millions like him? To figure out how to make your own MEV bot, you’ll most likely head to YouTube.
Scammers identified this train of thought among crypto investors who want to make millions fast. So they create online guides and videos that purport to enable you to create an MEV bot that generates free ETH, the perfect incentive for naive crypto enthusiasts.
How Does the Ethereum MEV Bot Scam Work?
Developing, deploying, and profiting from an MEV bot is a complex process that requires a deep understanding of blockchain technology, smart contracts, and trading strategies.
- Solid programming skills in Solidity.
- Full understanding of how the Ethereum blockchain works
- Mastery of various MEV strategies and their potential profitability.
- Ability to build and use APIs, blockchain explorers, and other data tools
- Testing code to ensure it operates as intended without introducing vulnerabilities.
- Continuous monitoring, refinement, and adaptation to compete with other MEV bots.
- Setting up the infrastructure to run the MEV bot.
That’s a handful for typical crypto investors, and not many of them are willing to put in gruesome hours to learn. Scammers know this. They also know that many people want an easy and quick route to making money, and these two factors create a perfect opportunity for them to thrive.
The scam uses a false guide, which ends with the victim losing their crypto assets.
- The victim is lured in by a catchy headline, e.g., “How to Make 50% a DAY With an MEV Ethereum Bot.”
- They watch the video and feel encouraged to try.
- If unsure, they’ll check the comments to see what other users say. All comments are unrealistically positive. However, they convince the victim to give it a try.
- They’ll load their wallets with ETH and follow through with the set-up process, which involves copying a smart contract code they’ve written to create and launch the bot.
- Finally, they’ll be asked to deposit some ETH to the MEV bot address for executing frontrunning and sandwich attacks. However, when they launch the MEV bot, all the ETH in the address is lost.
If you fund the contract with less ETH, your MEV bot targets another token with high burn fees (around 10%), which results in more waste in fees than it makes in profit. Essentially, it becomes a victim of an Ethereum validator frontrunning attack on MEV bots. The validator is likely to have been created by the scammer.
For instance, Blockwords reported that a similar exploit cost MEV bots $25 million in April 2023. The scam lures you into creating a MEV bot that competes with a more superior and well-funded MEV bot, and as a result, you lose your assets. This explains why the videos are posted on suspiciously old YouTube channels where the true owner’s identity cannot be retrieved.
MEV Bot Scam Victim? Here’s What to Do Next
Losing your ETH to online scammers is very frustrating. However, depending on the situation, you can follow these steps.
- Accept the Loss. Blockchain technology is designed to make recovery very challenging, e.g., irreversible transactions, pseudonymous nature, lack of central authority, and lack of regulation. Accepting you might never recover your funds eliminates high expectations and allows you to be rational going forward.
- Blockchain Analysis: Although it’s pseudonymous, tracking the movement of funds on the blockchain is possible. Use explorers and analysis tools to trace the lost Ethereum. This information may be useful if you’re willing and able to follow through with your recovery efforts.
- Report the Scam: Armed with the important data, you can report the scam to the relevant authorities, especially if you live in an area with substantial cryptocurrency regulation. You can also report the video creator to the platform to have the video taken down and save others from falling victim to the scam.
- Seek Community Assistance. You might not be the only person who has been scammed. It may be helpful to contact the broader cryptocurrency community for assistance. Share details of the scam to relevant forums and platforms dedicated to scam awareness and recovery.
Remember, time is of the essence when dealing with scams. The quicker you act, gather information, and involve relevant authorities, the higher your chances of recovering your tokens. Nevertheless, you’ll never be guaranteed to recover the lost tokens.
Keep Your Crypto Investments Safe
The cryptocurrency world is inundated with get-rich-quick schemes and con artists who will employ technical strategies to scam people. Scams are one of the biggest issues currently stalling crypto adoption. Even tech-savvy individuals can easily fall for scams.
Generally, to keep crypto investments safe, avoid any person promoting a get-rich-quick method or scheme. Also, take a day or two to research and involve other more experienced crypto investors to get their opinion. Lastly, never commit more money than you can afford to lose in any scheme that seems too good to be true.
Credit: Source link
