Crypto trading bots are reportedly making hundreds of millions of dollars \u2014 if not billions \u2014 in profit by implementing a technique known in the industry as \u201csandwich trading.\u201d<\/p>\n
According to a recent report by Fortune citing data from Bloomberg, bots are using \u201csandwich trading\u201d to rake in massive amounts of profit across the Ethereum ecosystem. <\/p>\n
The term refers to a process in which a bot is programmed by software developers to spot when another trader is attempting to purchase a cryptoasset on a blockchain, such as Ethereum or Cardano. The bot places an order on the same token, with the hopes of completing the transaction first and driving the asset\u2019s price up. The bot then \u201ccompletes the sandwich\u201d by selling the token to the original trader at a higher price tag.\u00a0<\/p>\n
The report claims developers have flooded the Ethereum ecosystem with bots, racking up an untold fortune in profits at the expense of other traders. According to Bloomberg, the method has become so successful that developers are finding it increasingly difficult to execute due the sheer number of other bots attempting \u201csandwich trading.\u201d\u00a0<\/p>\n
The end result has been a fanning out of \u201csandwich trading\u201d bots to other blockchains, notably Solana, Polygon and Avalanche. The bots have created a sudden and exponential increase in traffic for these altcoins, straining their networks and causing congestion. <\/p>\n
The reports notes that in January Solana was forced to implement new developments to address the bot traders, including \u201cflow control\u201d measures.\u00a0<\/p>\n