MEV Bot
Overview
A MEV bot, or Maximum Extractable Value bot, is a software program designed to exploit opportunities for profit in decentralized financial ecosystems, particularly in blockchain networks like Ethereum. These bots aim to capture value from certain types of transactions, such as frontrunning, liquidations, or sandwich attacks, by strategically executing trades or actions that take advantage of market inefficiencies or timing advantages. MEV bots rely on sophisticated algorithms and automation to identify and execute these profitable opportunities, often competing with other bots and traders in the process.
My main sources of research focused on YouTube videos and written documents by some of the key players in the Ethereum ecosystem, who are part of the Flashbots team.
My contribution
The team
Year
2020
Process
I conducted research and development to create an algorithm that helps me find and identify Maximum Extractable Value (MEV) opportunities such as frontrunning, liquidations, and sandwich attacks. In the end, I implemented an arbitrage strategy that allows me to obtain the prices of thousands of tokens on different Automated Market Makers (AMMs) to potentially execute transactions that yield profits.
To achieve this, I had to investigate the various functions and methods of obtaining prices in liquidity pools of exchanges based on the Uniswap structure. I also explored the mathematical operations that enable me to calculate the maximum possible return for a token. Given the nature of liquidity pool operations, these calculations are crucial when creating a bot that performs well.
