With the increasing popularity of blockchain technology, the cryptocurrency trading ecosystem is also expanding rapidly. Decentralized exchanges (DEX) have become an important platform for digital asset trading with their advantages of decentralization and transparency. As the market matures, various automated trading tools have emerged. MEV (Maximum Extractable Value) robots 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 deeply analyze the definition, principle, implementation method, determinants and optimization direction of the clamp robot.
With the development of technology and market demand, clamp robots have also evolved into various types to adapt to different trading environments and strategy requirements.
Here are some common types of gripper robots:
1. Sandwich clamp robot
This bot works by listening to large orders in the transaction pool and submitting transactions with higher gas fees before these orders are officially on the chain, thereby completing transactions before users. This strategy involves inserting transactions before and after the target transaction (front-running and back-running) to manipulate prices and profit from it.
2. Brick-moving clamp robot
This type of clamp bot focuses on exploiting price differences between DEXs to make a profit. It buys assets at a low price on one exchange and then sells them at a high price on another exchange to make a profit. This strategy usually requires the bot to be able to quickly identify price changes between different exchanges and execute trades quickly.
3. New Token Release Robot
This type of bot focuses on price fluctuations when new tokens are released. In the early days of a new token being listed on a DEX, prices are usually unstable and volatile. Clamp bots will quickly buy tokens when they are first listed and sell them after the price rises to get the difference. This type of bot needs to pay close attention to the release dynamics of new projects and have the ability to place orders quickly.
4. Liquidity pool arbitrage robot
Liquidity pool arbitrage robots perform arbitrage by transferring assets between different liquidity pools. They look for price differences between different pools and perform liquidity provision and withdrawal operations to realize profits. This requires the robot to be able to efficiently manage liquidity and quickly respond to price changes within the pool.
5. Flash loan arbitrage robot
Flash loan arbitrage bots use the characteristics of flash loans to trade. Flash loans allow users to borrow large amounts of money in a single transaction without collateral. Bots can use these funds to manipulate market prices in a short period of time to achieve arbitrage. For example, using flash loans to push up prices in one pool and then profit in another pool.
6. Triangular Arbitrage Robot
Triangular arbitrage involves trading between three different token pairs to take advantage of exchange rate differences to achieve arbitrage. For example, profits can be achieved 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 Clip Robot
The Sandwich Robot is an automated trading tool designed to make profits by preemptively trading on decentralized exchanges. It quickly captures on-chain trading opportunities and preemptively trades before or after the target transaction order is placed, thereby earning the difference. The core of the Sandwich Robot is to seize trading opportunities with high efficiency and speed.
2. The principle of the sandwich clamp robot
The profitable operation of the Sandwich Clip Robot is based on the following basic principles:
Front running: The robot buys the target token at a lower price before other users submit buy orders but before they are packaged into blocks by miners. When the users order is executed and drives the price up, the robot quickly sells to obtain the price difference.
Run after: Before other users sell tokens, the robot sells at a higher price. When the users sell order drives down the price, the robot buys back at a lower price, thereby making a profit. The so-called clamp is to clamp the trading users and earn the difference. The success of the clamp robot depends on the accurate grasp of trading timing and the high priority of trading 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.
●Filter the target transactions and identify the transactions related to the target DEX by comparing the transaction.to or transaction.from fields.
2. Screening and filtering
● Filter out transactions that are not related to the strategy and transactions of the own address to prevent dead loops caused by self-transactions.
3. Dynamically adjust Gas price
● Manually set a higher gas price so that miners prioritize the robot’s transactions to be executed before ordinary users.
4. Decoding transaction data
● Use smart contract interfaces (such as 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 ZANs node service. If you dont know how to create one, you can find a complete tutorial in this document (https://docs.zan.top/docs/quick-start-guide). The script uses ethers.js to implement it:
1. Create a listening ws service
2. Filter these transactions
3. A method is also needed to determine the transaction direction and manually set the Gas price
4. decode transaction method, call function
V. Determining Factors
The effectiveness and success of a gripper robot is closely related to a number of factors:
1. Transaction speed
Network latency and node response speed directly affect the robots reaction time. Using high-performance node services (such as ZAN, Infura, Alchemy) can reduce latency. ZAN also provides support for independent nodes.
2. Gas Fees
Gas fees are an important consideration when preempting transaction priority. Too high gas fees will eat into profits, so a balance needs to be found between speed and cost.
3. Market liquidity
High liquidity helps to execute large trades quickly without significantly affecting market prices. Insufficient liquidity may lead to increased slippage or trade failures.
4. Contract security
The security of the target contract is directly related to the risk of strategy operation. The robot needs to have basic verification capabilities for the contract code to prevent transactions from being exploited by malicious contracts. The ZAN contract audit capability can be used to conduct risk screening on the target contract (https://zan.top/home/ai-scan).
5. Competitive environment
There may be multiple clamp robots in the market competing for profit opportunities at the same time. When competition is fierce, the transaction success rate and profit may be affected.
in conclusion
MEV Robot provides an efficient solution for arbitrage on decentralized exchanges. It is able to gain an advantage in the market through real-time analysis and fast execution. However, Clamp Robot also faces the challenges of high competition and high risk. Investors need to make comprehensive considerations in technology implementation, risk control and market strategy to remain competitive in the ever-changing cryptocurrency market. In the future, with the advancement of technology and the expansion of the DeFi ecosystem, Clamp Robot will be expected to realize its potential in more fields and create more value for users.
This article was written by KenLee from ZAN Team (X account @zan_team ). The content of the article is only for technical sharing and does not constitute any investment advice.
