Thanks for posting about this. That is essential.

From the article:

The easiest way to grasp what is occurring right here is with an instance.

https://etherscan.io/tx/0xafc8a6262e36ed236f3992e152d5367a767530d8a8b1b33e7dd61c34a7d55fa5

For this transaction, a drainer bot exploits such an unnatural worth disparity to triangularly arbitrage the $BUIDL-$UniFi pair:

First, it makes use of ETH to purchase UniFi by way of Uniswap’s ETH-UniFi pool.

  • On this pool, the value of 1 UniFi = ~0.00114 ETH.

  • (2.304 ETH / 2,020 UniFi = ~0.00114 ETH)

  • With 2.304 ETH, it buys ~2,020 UniFi.

Then, it sells that UniFi for BUIDL by way of Uniswap’s UniFi-BUIDL pool.

  • On this pool, the value of 1 BUIDL = ~2.83 UniFi.

  • (713 buidl / 2,020 UniFi = 2.83)

Right here, due to Uniswap’s exclusionary routing mechanism, the value of UniFi is lagging. Thus, it’s comparatively extra priceless, and the bot is ready to purchase extra BUIDL with it than had it achieved so immediately with ETH by way of the ETH-BUIDL pool.

With ~2,020 UniFi, it buys ~713 BUIDL; if costs had been correctly synced, it could have solely acquired 667.

Lastly, it sells that BUIDL for ETH by way of Uniswap’s ETH-BUIDL pool.

  • On this pool, the value of 1 ETH = ~0.0034 BUIDL. (713 BUIDL / 2.458 ETH = ~.00344)

  • With ~713 BUIDL, it buys ~2.46 ETH.

  • This can be a ~0.16 revenue in ETH.

The bot has drained the equal of 0.16 ETH from the BUIDL and UniFi liquidity swimming pools.

This can be a negative-sum and irrevocable lack of worth, and as quickly as one other commerce is made by way of a pair tied to one in every of Uniswap’s six routing tokens, the value disparity will reopen, the bot will swoop again in and extra worth will probably be drained.

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