EigenPhi's 2022: A Year in Review Through Our Top Reports
EigenPhi's 2022 Report Round-Up: The Must-Reads of the Year
Welcome to our annual report on the top 10 reports published by EigenPhi in 2022.
2022, the past bleak year, has been one of constant change and challenges, but through it all, EigenPhi has remained dedicated to providing top-quality data and analysis to the community. As we review the standout reports from 2022, you may discover insights and perspectives that shed new light on the constantly evolving world of DeFi.
These 10 reports cover:
MEV’s impact on the Ethereum ecosystem.
Newly emerged risks and attack vectors.
Following up on some of the most concerned events.
📈 General MEV Impact on DeFi Protocol Research
You can't really know what's going on without observing the undercurrent of DeFi being made of complex transactions and Smart Contracts. So we provide in-depth research based on our on-chain transaction data analysis and Smart Contract composability decoding.
10M Revenue Drain in 5 Months: MEV impact on Curve
By providing the MEV impact overview on Curve, we hope this report could inspire stakeholders and researchers to shed light on these questions:
How much do arb traders charge for the service they do for Curve?
How far do MEV bots impact the #Curve community and its users?
How much do sandwich attacks drain from users?
Who would be most likely to be involved in MEV activities?
How valuable could MEV data be to enhance the protocol design?
Highlights:
Arbitrage bots have generated more than $10M value in Curve pools, and sandwich bots have extracted $0.98M.
Volume per transaction for Sandwich MEV is one magnitude larger than arbitrage.
The most favorite Curve pool for the arbitrage bot and sandwich bot: USDT/WBTC/WETH, DAI/USDC/USDT.
More victims have suffered sandwich attacks and losses since June 2022, with an increasing speed of 300%.
Only 19 sandwich bot contracts have initiated sandwich attacks in Curve pools.
Keywords: Curve, MEV, AMM, Protocol Design
How AAVE's $1.6 Million Bad Debt Was Created
This research examines the timeline of the whole $CRV short saga and concludes: an asset's level of liquidity and safety margin can change over its life cycle and is also susceptible to contagion risk by associated assets. AAVE's $1.6M bad debt is an example of it.
Key takeaways:
The root cause of this event is the transparent nature of a blockchain makes financial information easily accessible, giving attackers more advantages.
The current lending protocols are not designed with a risk control mechanism based on timely adjustment based on price and liquidity information.
We propose creating a feedback control system for DeFi based on safety cushions and liquidity sensors to better address risk in the long term.
Keywords: Aave, Curve, Liquidation, Liquidity Risk
MEV's Impact on Uniswap
The award-winning research discusses the various ways in which MEV bots can extract value from Uniswap users and how this value compares to the total revenue generated by Uniswap.
Key takeaways:
MEV bots can extract value from Uniswap users in various ways, including through arbitrage, front-running, and JIT bot activity.
The total value extracted by MEV bots is significant, representing a substantial portion of the total revenue generated by Uniswap.
MEV bots are a significant and growing presence in the Uniswap ecosystem, and their impact is likely to continue to increase.
Keywords: Uniswap, MEV, AMM, JIT, Transaction Pattern
Flash Boy’s Gain, Everybody’s Pain: 2022 Mid-Year Report of Sandwich MEV on Ethereum
This research is the first comprehensive report revealing the whole supply chain of Sandwich attacks to the public.
Key takeaways:
Sandwich attacks are a significant problem in the cryptocurrency market, causing traders to lose millions of dollars every year.
Most sandwich attacks are carried out by a small number of centralized actors, using bots to place orders.
Most of the sandwiches' ROI had been between 20% to 40%, while 72% of the total revenue has been centralized to the top 10 miners.
Keywords: MEV, Sandwich, DeFi Protocols, Front-running
🎯Case Studies
DEFI TRANSACTION ANATOMY
Dissection on the complicated DeFi transactions reveals what kind of risks you are exposed to when trading crypto and the inner mechanisms of these perils.
Casting a Magic Spell on Abracadabra
An Arbitrage Captured the Price Caching Design Defect to Profit Over $110K.
Key takeaways:
Human mistakes, such as bad code and the intricacy of complex systems, can lead to disastrous consequences for DeFi protocols.
The utilization of the price-caching design defect of Abracadabra was the cause of the $110K arbitrage opportunity.
Tools and services such as EigenPhi’s EigenTx and SlowMist can help to monitor and analyze risks in DeFi protocols in a financial and bottom-up style.
Keywords: Abracadabra, Arbitrage, Design Defect, Derivative
A Brand New Sandwich Bot That Could Empty LP's Wallet
Here's a sandwich trade from a genius. For the liquidity providers of DEXes, this new strategy conducts risk-free arbitrage against the change in AMM's swapping slippage, becoming a new attack vector enough to raise the alarm. LPs should carefully set checkpoint thresholds to avoid losing against such kinds of sandwich bots.
Keywords: Sandwich, DEX, AMM, Liquidity Provider
A Sandwich Cook Bot Always Targeting Whales Borrowed the Biggest Flash Loan of November: $153.9M
A sandwich front-runner employed a $159.3M flash loan to set up a sandwich front-running. This common MO of the attacker has made it one of the most productive sandwich searchers, posing considerable threats to whales who have no idea of being victims of such malicious behaviors.
Keywords: Flashloan, Sandwich, Whale, MEV
Event Post-Mortem
Big events trigger turbulence and arbitrage opportunities. This is the place to explore those who benefited from these scenarios, what they did, and how they did it.
Your $APE Would Not Be Your Ape if You Sold Your Bored APE.
Bizarre staking rules of APE cost 3 NFT owners to lose their NFTs and $75K worth of APE tokens. The post details the asset flows of such losses.
Keywords: NFT, APE, Arbitrage, Design Defect
Following the Hacker of Wintermute
An analysis using EigenTx on the hackers of Wintermute found they were converting illegal income into several altcoins created by them to whitewash the stolen asset.
Keywords: Wintermute, MEV, Token Flow
Farewell to the $1 Trillion Market During the Night of Liquidation
The market's collapse is caused by the chain reaction of stETH depeg and Celsius’s user asset freezing. This post shows you how $165M assets got liquidated in less than 2 hours on AAVE and Compound.
Keywords: Celsius, stETH Depeg, MEV, Liquidation, Systematic Risk
From examining the impact of MEV bots on the protocols to tracking the ever-evolving landscape of liquidity pools, EigenPhi Research has consistently delivered insights that help the DeFi world. As we look towards the future, we can't wait to see what the next year brings and continue providing the best possible resources to our community.
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