Network vulnerabilities Despite being widely praised for its velocity and low costs, the Solana network has unfortunately become a lightning rod for advanced exploits. Of these, sandwich attacks are one of the most egregious threats to traders on platforms such as GMGN. Learning more about how these attacks operate and taking steps to protect assets from them is an important first step to defending against them. MetaBlock X will provide differentiation to GMGN users. We arm them with the insights and resources required to help them explore this new frontier of crypto safely and securely.

Understanding Sandwich Attacks on Solana

A sandwich attack is a specific type of front-running exploit. In this example, a bad actor artificially limits the price of an asset to make a profit at the expense of an unsuspecting trader. The attacker strategically places two orders: one immediately before the victim's transaction (the "front-run") and another immediately after (the "back-run"). This effect “sandwiches” the victim’s trade, making them have to buy high and sell low, with the attacker taking the profit in between.

On Solana, these attacks are commonly carried out through the use of Jito bundles, an innovation designed to optimize execution of transactions. Method 2: Jito bundles Jito bundles make it easy for validators to coordinate transactions and have them processed in a preferred order. Attackers take advantage of this feature to ensure their front-running and back-running orders are filled on top of the victim’s trade. Note that the attack usually involves swapping wrapped Solana (wSOL) for another token, not the other way around.

In a real-world example, the attacker would check for a pending transaction on GMGN. They buy in right before the victim’s transaction, accordingly increasing the price of that asset. Once the victim has completed their transaction at the manipulated price, the attacker quickly submits a sell order. This action enables the attacker to reap the reward from the price disparity, while the victim is stuck with the deficit. In an actual-world scenario discussed on this page, a bot purchased less than $1 SOL of their tokens. It then immediately sold them, triggering an unbelievable 99% slippage for the targeted user.

Recognizing the Signs of a Sandwich Attack

Knowing how to recognize the warning signs of an oncoming sandwich attack is the first step in defending yourself from one. While these attacks can be complex and difficult to detect, there are several red flags that traders should be aware of:

  • Unusual price slippage: Be wary of large, unexpected price swings or slippage when executing trades. This is a primary indicator that someone may be manipulating the market around your transaction.
  • Transactions with similar patterns: Look for patterns of buy and sell transactions originating from the same wallet within a short timeframe. This could indicate an attacker attempting to front-run and back-run trades.
  • High gas fees: Unusually high gas fees can signal that someone is attempting to prioritize their transactions to front-run or back-run other trades.
  • Rapid trade execution: Sandwich attacks often involve extremely fast trade execution. Be cautious of trades that are processed almost instantaneously.
  • Trades with identical or similar amounts: Keep an eye out for trades with identical or very similar amounts being executed in close proximity to your own, as this could be a sign of coordinated manipulation.

Protecting Yourself on GMGN: Slippage and Limit Orders

The good news is there are a number of proactive measures GMGN users can employ to reduce the likelihood of becoming a target of sandwich attacks. Avoiding slippage and using limit orders to manage your risks are the two most important strategies.

Understanding Slippage

Slippage determines the maximum amount your trade’s price can deviate from your desired price. It prices the trade at whatever real market price would be reflective of the trade. It happens because of market volatility, low liquidity or fast price movements. There are two types of slippage: positive slippage (where the trade is executed at a better price than expected) and negative slippage (where the trade is executed at a worse price).

Setting a slippage tolerance is crucial. This enables you to define the maximum acceptable difference between the expected and executed price. If the slippage is above your specified tolerance level, we’ll auto-cancel the transaction. By doing so you prevent yourself from the perils of a sandwich attack.

Utilizing Limit Orders

Limit orders allow you to specify the exact price point at which you want to buy or sell any asset. You’re in complete command of your ticket-buying experience! With a limit order, you have the power to decide your trade. It won’t complete unless the price reaches what you want to pay. This stops actors on the private-order book from pushing around the price and forcing you to trade at a worse exchange rate. Master the regulations that govern limit orders. Limit orders are essential to smart trading and investing. One example is the Manning Rule, which protects customer limit orders from predatory practices by market makers. Caveats for institutional customers and bulk orders are noted. Having a handle on what these rules are will help you better navigate this competitive market.

Additional Security Measures

Outside of combating slippage and limit orders, implementing a Zero Trust philosophy to every platform and engagement you have is extremely important. Suspicious of every platform, robot, plug-in wallet authorization signature, etc. As a reminder, always review transaction information carefully and confirm the authenticity of any tool or service before using it.

Protecting your private key is paramount. To lower the chances for theft from Trojans which can read your clipboard, copy your private key partially. Then, painstakingly type in the rest. You’ll enjoy a much greater level of security because of this simple precaution.

By integrating GMGN, users can trade across the Solana network with confidence and security. They can do this through educating themselves and learning about the prevention of sandwich attacks. MetaBlock X is not focused on empowering you. We deliver the education and tools that you need to succeed in today’s dynamic crypto environment.