Tether Takes Action: Blacklists Validator Address Linked to $25 Million MEV Bot Drain – Here's What Happened
Tether, the company behind the world's largest stablecoin, has blacklisted a validator address responsible for draining $25 million from Miner Extractable Value (MEV) bots.
The validator exploited a bug in the MEV-boost relay to bypass MEV bots by attempting to execute a sandwich trade, which processes an order immediately before another trade and then right after it.
Essentially, this process simultaneously front-runs and back-runs an originating transaction, on the condition that its verification status is still pending.
The validator, in this case, back-run the MEV’s transaction, leading to losses of nearly $25 million in various digital assets, making it the largest MEV exploit to date.
A validator is responsible for processing transactions and creating new blocks on the blockchain.
Blockchain explorer Etherscan has already flagged the address involved.
The attack has the potential to transform the MEV ecosystem because MEV extractors will wonder "which Ethereum validators are malicious," former Ethereum Foundation member Hudson Jameson said in a tweet.
MEV (Maximal Extractable Value) bots have been profitable by leveraging information about transactions about to be executed, often using arbitrage to capitalize on price differences between exchanges.
These bots front-run trades, purchasing currency slightly cheaper than other traders, which results in their practices being viewed as a form of "invisible" tax.
To date, 27 Ethereum-based projects joined forces to launch MEV Blocker, aiming to minimize the value extracted from traders by MEV bots.
Tether's decision to blacklist the validator address has drawn criticism from the crypto community, with some arguing that it sets a "bad precedent" for regulatory and policy-related
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