In January Flashbots released Flashbots Alpha v0.1, a proof of concept communication channel between miners and users that enables transparent and efficient MEV extraction.
Since then we've seen rapid adoption, and now over 30% of blocks on Ethereum are Flashblocks.
Flashbots has two types of direct users today: searchers & miners
Searchers are users who send transactions via Flashbots - today these are mostly bot operators extracting MEV
Miners are the block producers of Ethereum today, who want to extract MEV in a fair & transparent way
Miners who run MEV-Geth and receive Flashbots bundles make extra ETH for doing so.
In fact miners make about ~5% more revenue for each Flashbots blocks they mine, and in total miners have made ~$45m in profit from Flashbots.
Measured in ETH or USD daily miner profit has been going up over time, and yesterday was Flashbots' most profitable day. About ~800 ETH or ~$3m in miner profit.
Mining Flashbots blocks is profitable because searchers' transactions pay more than the transactions they displace.
The πͺ line is the gas price of searchers' transactions & the π¦ line is the gas price of txs at the tail end of blocks
The "tail gas price" txs are the least profitable for miners & are pushed out to make room for searchers' txs. Since πͺ > π¦ this is profitable to do!
We've seen strong adoption by searchers because Flashbots is great for them too. Searchers only pay for txs if they are successful & can send groups of txs bundled together to be executed atomically
These are super powers that open up many new MEV opportunities
Quantifying the # of searchers is hard because a searcher can use multiple signing keys in the relay, multiple EOAs, and multiple contracts on-chain. We're moving towards a reputation system based on signing keys, but for now we've listed three different searcher adoption metrics
Quantifying how much profit searchers have made is also hard (we're working on it), but we can easily see how much they've paid to miners
The top searcher contract has paid $7.1m to miners in total, and 11 searcher contracts have paid more than $1m.
If you're interested in learning more about Flashbots and what we've been up to check out the latest Flashbots transparency report here:
Normally when you swap on Uniswap the transaction is publicly relayed through nodes until it reaches miners. Due to this anyone who wants to can see the transaction before it is mined.
Our investigation starts with this massive - but otherwise innocuous - Flashbots transaction that has 0 gas price and a payment of 80 ETH to a miner. Makes sense.
It looked at first like someone sniping a new token on Uniswap.
Last night someone used an *extremely* clever mechanism to take a hundred ETH from sandwich bots
Then a 2nd person jumped in and made 300 MORE ETH by exploiting other sandwich bots
Long thread on how ππ»
To understand how this happened you need to know a bit about Flashbots
You can think of Flashbots as a way for users to directly communicate their transaction ordering preferences to to miners via "bundles" of transactions
Instead of users paying transaction fees via gas prices, using Flashbots users pay fees via a smart contract call (block.coinbase.transfer) which transfers ETH to a miner
Here's a screenshot of a random arb that does this, note the 0 gas price & 0.075 ETH transfer to Spark Pool
So this one is interesting! A bot has been backrunning new token listings, effectively paying premium to miners to buy newly listed tokens before anyone else can
And a new token fought back yesterday, trapping the bot for $200k while benefiting from their buy. Here's how ππ»
For weeks this bot has been monitoring the Ethereum mempool for new pairs being created on Uniswap. If it finds one it the bot places a buy transaction immediately behind the initial liquidity. That way they can buy a new token before anyone else.
They've been paying miners huge amounts for the right to do this! You can see here a few of the top Flashbots bundles of all time are from this bot. In total they've paid 340 ETH to miners.
Side note: this is from a dashboard Flashbots is making public soon.