The Solana network has recently come under a series of Sandwich attacks, a notorious front-running exploit, sparking intense debate on the implications on the broader ecosystem. The spate of incidents prompted the Solana Foundation to expel a group of rogue validator operators from its delegation program for their involvement.
As per the latest data, Sandwich bots siphoned off over 150k SOL from unsuspecting retail memecoin traders last month. Notably, a bulk of these transactions came from the controversial gambling platform, Pump.fun. Jarry Xiao, cofounder of Ellipsis Labs, expressed his frustration saying that sophisticated actors should compete to lower the slippage left by retail users and, not maximize it.
Echoing a similar sentiment another member urged a revamp of the current protocol design, which can automatically weed out malicious ones by scoring validators by average realized slippage. Reputable validators can build systems to have market makers compete for fees down before the transaction is revealed. Despite calls for improving the application layer, the consensus is clear that it is an uphill task.
Amidst this discussion, a member questioned the very foundation of the meme coin frenzy. “Do you believe that the capacity for this wealth extraction is what helped kick off the meme mania to begin with? If you can make tens of millions on sandwich trades and priority fees, then it makes sense to burn a couple of million via injected liquidity to set it all in motion. If MEV disappeared entirely, do you think meme mania would slow down?”
However, it’s noteworthy to mention that not all types of MEVs are bad for retail. Retail is particularly harmed by “frontrunning,” where the opportunity exploiter forces retail investors to accept worse prices than they would have otherwise.
Solana’s MEV: The Bigger Picture
Additionally, Frontrunning is possible with CEXs and single-sequencers, where it is relatively easier to prevent in a centralized environment because everyone just has to scrutinize a single actor. In the recent incident, the subset of validators that engaged in frontrunning the transactions was extremely small.
Moreover, the economic “incentives” to frontrun are short-lived at best; engaging in this behavior will hamper Solana’s ability to compete with CEXs long term. When we have a decentralized and permissionless network, having a few bad actors is inevitable. This is not a vulnerability, but a conscious tradeoff of decentralization, wrote one expert.