Maximal Extractable Value (MEV) bots were drained last week for $25 million by an address that Tether has blacklisted. The attacker took advantage of a flaw in the MEV-boost relay to outwit the bots trying to execute a sandwich trade. The address contained about $3 million in USDT and a total of $21 million in different ERC-20 tokens, which prompted criticism of its censorship strategy from the community.
The blacklisting by Tether, according to Arthur, an engineer at the Kraken cryptocurrency exchange, was “bullshit.” He also claimed that MEV bots take advantage of traders and that the sandwich trade they were attempting to execute was just as sinister as the draining of their funds. It was dubbed the “most concerning DeFi development of 2023” by Fastlane Labs co-founder Jordan Hagan and Polygon co-founder JayntiKanani.
The main problem is Tether’s readiness to block or unblock significant amounts depending on the activity in the consensus layer (Beacon Chain). By using information about the transactions that are about to be carried out, MEV bots can increase their profits. MEV Blocker was recently launched by 27 Ethereum-based projects in an effort to reduce the value that is taken from traders.
