The recent chaos in the DeFi ecosystem has resulted in one of the largest MEV reward blocks ever. On July 30th, a bot executed front-running transactions, leading to a block reward of 584.05 ETH.
Ethereum core developer “eric.eth” reported on July 31 that Monday had witnessed some of Ethereum’s history’s most significant MEV reward blocks, inspired by the exploit of Curve Finance. The pioneer DeFi protocol’s stable pools were compromised on Sunday, July 30th due to a reentrancy vulnerability traced to some versions of Vyper— a Python-related programming language commonly used in the Ethereum Virtual Machine (EVM).
While the 584.05 ETH block reward is a staggering amount, it is not the largest. In March, a larger MEV reward block of 692 ETH was recorded. The MEV bot’s strategy involves detecting incoming hacks in the mempool, reproducing transactions, and paying block producers with a significant amount of ETH to gain priority.
MEV bots aim to generate extra revenue by reordering or inserting transactions in regular blocks, creating arbitrage opportunities. Moreover, validators propose blocks using a relay that outsources block production to entities specialized in extracting extra revenue. They receive a cut of this revenue in exchange for allowing MEV bots to front-run transactions.
The MEV bot block reward of 584.05 ETH, valued at approximately $1 million, was confirmed at 1.34 am UTC on July 31st, according to Beaconcha.in.
Meanwhile, responses to the situation raised moral questions, as potentially illicit funds were used to pay validators for enabling transaction front-running.
In April, a Subway-themed trading bot generated significant extractable value by utilizing “sandwich attacks” during the memecoin trading frenzy.