Over the past month, Solana’s decentralized finance (DeFi) ecosystem has been the subject of an onslaught of sandwich attacks. This unfortunate trend has been a source of frustration for developers and users alike. As a result, attackers are exploiting transaction ordering to extract value with growing success. One trading application, GMGN, has become a central focus of these attacks. The rising frequency and impact of these attacks have sparked debate within the Solana development community about how best to address this growing threat.
Just in the past month, over 260,000 sandwich attacks have been successfully executed on Solana-based trading apps. So far, these attacks have led to an extraction of over 23,600 SOL, showing how lucrative this exploit can be. Solana’s underlying technology is considered an impressive breakthrough for its speed and transaction affordability. This very same design unfortunately opens the door to transaction-level arbitrage strategies, like sandwich attacks. GMGN, an AI-driven auto-bidder trading app on Solana, has been disproportionately affected and is responsible for the majority of these attacks.
GMGN Under Scrutiny
GMGN, a unique platform built for traders that features an AI-infused, one-click trading interface, has taken off like wildfire in the Solana trading community. Its popularity and the absence of a solid infrastructure to defend it have left it vulnerable and been a veritable playground for malicious actors. According to data, GMGN takes 30.8% of all sandwich profits related to its trading activity. That astounding status places it even more focused than the best app on the Solana network.
Additionally, the app’s popularity among newer, less sophisticated crypto traders has further led to its overexposure to sandwich attacks. These users are often less aware of the risks and vulnerabilities associated with DeFi trading, making them easier targets for experienced attackers. Even with the increase in attacks, only 7% of the value from sandwich attacks on GMGN has been successfully drained from its trades. That means most of these attacks backfire, or at best, yield peanuts.
As the public becomes more aware of the risks, GMGN’s vulnerabilities will be more heavily scrutinized. Users as well as ecosystem partners will be looking more critically at these issues. The platform will need to address these security threats, at the very least. In this way, it’ll continue to earn the trust of users and deliver a sustainable AI-powered trading experience.
Solana's Sandwich Attack Dilemma
In fact, sandwich attacks on Solana are now on the rise. This trend has led to a robust discussion among developers about the most effective solution to the problem. Others think it’s best to address the problem at the underlying protocol level. As potential fixes, they suggest implementing changes at the Solana blockchain level to minimize or eliminate exposure of users to sandwich attacks. Such an approach would offer a network-wide remedy, safeguarding every Solana-based application against this sort of exploit.
From a different viewpoint, Solana has taken the other tack and shifted the onus to safeguard down to the developers behind each individual Solana-based application. Developers need to be held accountable for the security of their platforms. They should be taking their own steps to recognize and protect against sandwich attacks. This common sense approach would encourage more agile and context-driven solutions, based on the unique needs and vulnerabilities of each application.
The discussion over protocol-level solutions versus application-level protections highlights the contentious and complicated debate that surrounds these issues. Read together, it exposes the absence of a real consensus amongst the Solana community. The approach chosen will have enormous implications for the future of Solana’s DeFi ecosystem going forward.
Broader Implications for Solana's DeFi Ecosystem
This dramatic increase in sandwich attacks represents a dangerous threat to Solana’s growing DeFi ecosystem. Developers and users alike are becoming more aware of the high security potential for harm from such attacks. They worry that these risks may inhibit innovation and drive users off the network. Unless addressed, the increasing danger of sandwich attacks will continue to increase and jeopardize lucrative exchanges on Solana.
The vulnerability of platforms like GMGN underscores the need for greater security awareness and the implementation of robust protection mechanisms across the Solana ecosystem. The community needs to come together to address sandwich attacks like this. Together, we can arrive at the best solutions that will preserve long-term overall health and stability of Solana’s DeFi ecosystem.
