1inch Network unveiled RabbitHole to shield MetaMask wallet users from sandwich attacks — one of the most common methods of extracting MEV in DeFi, according to project representatives who told ForkLog.
Such manipulations to extract additional income via frontrunning transactions are not illegal per se. In the community, they are generally regarded as unethical.
To extract additional income, the attacker scans mempools with specialized bot programs for large pending swap trades on decentralized platforms.
He then initiates two transactions — one before and one after the victim’s planned exchange, thereby forming a “sandwich.” As a result, the bot operator “pumps” up the price of the coins bought by the victim. He then profits by liquidating the assets.
The earliest such manipulation is believed to have been recorded on Bancor on 27 February 2018. By some estimates, in 2022 alone users lost at least $800 million to sandwich attacks.
Some miners and validators also resort to MEV to capture the maximum gas fees.
The RabbitHole feature from 1inch eliminates the problem of sandwich attacks. The solution works as a proxy between MetaMask and Ethereum validators — swap transactions bypass the mempool. To enable this, developers have aggregated on the platform products from Flashbots, BloXroute, Eden and Manifold that make this possible.
Initially, during the testing period, RabbitHole will be freely accessible. After receiving feedback from the community, the platform will consider monetisation options for the solution.
Back in November, the 1inch team launched the fifth version of the protocol. Transactions on 1inch Router v5 were roughly 5% cheaper than in the previous iteration of the platform.
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