Web3 Beginner Series: Understand the MEV robot in five minutes, and you can also write it

Against the backdrop of the increasing popularity of blockchain technology, the cryptocurrency trading ecosystem is also rapidly expanding. Decentralized exchanges (DEX) have become an important platform for digital asset trading with their advantages of disintermediation and transparency. As the market matures, various automated trading tools have emerged. MEV (Maximum Extractable Value) bots are automated programs used to execute strategies and other trading strategies on blockchain networks. They extract maximum value by rearranging, inserting or delaying blockchain transactions. This article will provide an in-depth analysis of the definition, principles, implementation methods, determining factors and optimization directions of clamp robots.

With the development of technology and market demand, clip robots have also evolved into various types to adapt to different trading environments and strategic needs. Here are a few common types of gripper robots:

0 1. Sandwich clamp robot

This kind of robot listens for large orders in the trading pool and preemptively submits transactions at a higher gas fee before these orders are officially put on the chain, thereby completing transactions before users. This strategy involves inserting trades (front and back runs) before and after a target trade in order to manipulate prices and profit from them.

02. Brick-moving clamp robot

This type of clip bot focuses on exploiting price differences between DEXs to achieve profitability. It makes a profit by buying an asset at a low price on one exchange and selling it at a high price on another exchange. This strategy typically requires a bot that can quickly identify price movements between different exchanges and execute trades quickly.

03. New token release robot

This bot focuses on price fluctuations when new tokens are released. In the early days of a new token being listed on DEX, prices are often unstable and volatile. The clip bot will quickly buy the token when it first comes online and sell it after the price rises to capture the difference. This type of robot needs to pay close attention to the release of new projects and have the ability to place orders quickly.

04. Liquidity pool arbitrage robot

Liquidity pool arbitrage bots perform arbitrage by transferring assets between different liquidity pools. It looks for price differences in different pools, performs liquidity provision and withdrawal operations to realize profits. This requires robots that can efficiently manage liquidity and quickly respond to price changes within the pool.

05. Flash loan arbitrage robot

Flash loan arbitrage robots use the characteristics of flash loans to conduct transactions. Flash loans allow users to borrow large amounts of money in one transaction without the need for collateral. Robots can use these funds to manipulate market prices in a short period of time to achieve arbitrage. For example, use flash loans to drive up prices in one pool and then make a profit in another pool.

06. Triangular arbitrage robot

Triangular arbitrage involves trading between three different token pairs to take advantage of exchange rate differences for arbitrage purposes. For example, profits can be realized by trading A/B, B/C, and then C/A in a cycle. This type of robot requires complex calculations and fast trade execution capabilities.

This article mainly analyzes the sandwich clamp robot with everyone.

1. Sandwich clamp robot

The Sandwich Bot is an automated trading tool designed to profit from front-running trades on decentralized exchanges. It quickly captures on-chain trading opportunities and trades before or after the target transaction is placed, thereby earning the price difference. The core of the sandwich clamp robot is to seize transaction opportunities with high efficiency and speed.

2. Principle of Sandwich Gripper Robot

The profitable operation of the sandwich clamp robot is based on the following basic principles:

1. Front-running: Before other users submit buy orders but have not yet been included in the block by miners, the robot buys the target token at a lower price. After the user's order is executed and drives the price up, the bot quickly sells to capture the price difference.

2. Post-running: Before other users sell tokens, the robot sells them at a higher price. When the user's sell order drives down the price, the robot repurchases it at a lower price, thereby achieving profit.

The so-called clip means that the trading user of the clip earns the price difference. The success of the clip robot depends on the precise timing of transactions and the high priority of transaction execution.

3. Implementation ideas

1. Real-time monitoring of transactions:

● Use WebSocket to connect to blockchain nodes and monitor transactions to be packaged in real time.

●Screen target transactions and identify transactions related to the target DEX by comparing transaction.to or transaction.from fields.

2. Screening and filtering

● Filter out transactions unrelated to the strategy and transactions with your own address to prevent an infinite loop caused by self-trading.

3. Dynamically adjust Gas prices

● Manually set a higher Gas price to allow miners to prioritize bot transactions to execute before regular users.

4. Decode transaction data

● Use smart contract interfaces (such as the Interface in ethers.js) to decode transaction data and determine the tokens and amounts involved in the transaction.

● Based on the decoded information, select the appropriate contract calling method, such as swapExactETHForTokens or swapTokensForExactTokens .

4. Code ideas

I chose the wss provided by ZAN's node service. If you don't know how to create it, you can find a complete tutorial in this document (https://docs.zan.top/docs/quick-start-guide). The script uses ethers.js. achieve it

1. Create a listening ws service

 const ZAN_WSS_URL = `wss://api.zan.top/node/ws/v1/eth/mainnet/${YOUR_KEY}` const ZANWssProvider = new ethers.providers.WebSocketProvider(ZAN_WSS_URL); ZANWssProvider.on(\"pending\", (tx) => { // TODO })

2. Filter these transactions

 ZANWssProvider.on(\"pending\", (tx) => { if (transaction && transaction.to && transaction.to.toLowerCase() === ROUTER.toLowerCase() && transaction.from !== blackAddress) { // TODO } })

3. We also need a way to determine the trading direction and manually set the Gas price.

 function calculate_gas_price(action, amount) { if (action === \"buy\") { return amount.add(100000000) // 0.1 Gwei } else { return amount.sub(100000000) // 0.1 Gwei } }

4. decode transaction method, call function

 const iface = new ethers.utils.Interface(abi) const result = iface.decodeFunctionData(\'swapExactETHForTokens\', transaction.data)

5. Determining factors

The effectiveness and success of a gripper robot is closely related to a variety of factors:

1. Transaction speed:

• Network latency and node response speed will directly affect the robot's reaction time. Latency can be reduced by using high-performance node services (such as ZAN, Infura, Alchemy), and ZAN also provides support for independent nodes.

2. Gas cost:

• Gas fees are an important consideration when prioritizing transactions. Excessive gas fees will eat into profits, so a balance needs to be found between speed and cost.

3. Market liquidity:

• High liquidity helps execute large trades quickly without significantly affecting market prices. Lack of liquidity can lead to increased slippage or failed trades.

4. Contract security:

• The security of the target contract is directly related to the risk of strategic operations. The robot needs to have basic verification capabilities for contract codes to prevent transactions from being exploited by malicious contracts. The ZAN contract audit capability can be used to conduct risk investigation on the target contract (https://zan.top/home/ai-scan).

5. Competitive environment:

• There may be multiple gripper robots on the market competing for profit opportunities at the same time. When competition is fierce, transaction success rates and profits may be affected.

in conclusion

The MEV robot provides an efficient solution for arbitrage on decentralized exchanges. Through real-time analysis and fast execution, it is able to gain an edge in the market. However, gripper robots also face high competition and high-stakes challenges. Investors need to comprehensively consider technology implementation, risk control and market strategies to remain competitive in the ever-changing cryptocurrency market. In the future, with the advancement of technology and the expansion of the DeFi ecosystem, Clip Robot will be expected to unleash its potential in more fields and create more value for users.

This article is written by KenLee of ZAN Team (X account @zan_team ). The content of the article is only for technical sharing and does not constitute any investment advice.