Tether, the company behind the world’s largest stablecoin, has blacklisted a validating address responsible for the extraction of $25 million from MEV bots (Miner Extractable Value).
The validator has exploited a bug in the MEV-boost relay to circumvent MEV bots by attempting to execute a sandwich trade, which processes an order immediately before another trade and right after it.
Essentially, this process allows both an order before and an order after an originating trade to be executed simultaneously, provided that its verification status is still pending.
In this case, the validator executed the SRM transaction in reverse, which resulted in losses of nearly $25 million in miscellaneous digital assets, making it MEV’s most significant achievement to date.
A validator is responsible for processing transactions and creating new blocks on the blockchain.
Blockchain explorer Etherscan has already reported the offending address.
The attack has the potential to transform the MEV ecosystem because MEV miners will wonder “which Ethereum validators are malicious,” said Hudson Jameson, a former member of the Ethereum Foundation, in a statement. tweet.
MEV (Maximum Extractable Value) robots have been profitable by mining information from trades about to be executed, often using arbitrage to capitalize on price differences between exchanges.
These bots outpace trades, buying currencies slightly cheaper than other traders, which makes their practices considered a form of “invisible” taxation.
To date, 27 Ethereum-based projects have joined forces to launch MEV Blocker, with the aim of minimizing the value extracted from traders by MEV bots.
Crypto community hits out at Tether for blacklisting validator address
Tether’s decision to blacklist the validator’s address has sparked reviews from the crypto communitywith some believing it to be a “bad precedent” for regulatory and policy implications.
By blacklisting the address, Tether is effectively exercising its authority to censor transactionswhich could be seen as a centralizing force in an ecosystem meant to promote decentralization.
This raises concerns about the potential abuse of power by centralized entities, such as Tether, and the implications this could have on decentralized finance (DeFi).
Thogard, co-founder of Fastlane, called it the “most concerning DeFi development of 2023”. He has added :
“The ‘victims’ of the bot signed these transactions and sent them to the relay. They were executed. The exploit was not in DeFi. The Tether block implies that they have an opinion on the consensus / the social layer of DeFi”.
Meanwhile, a chain sleuth, known as ZachXBT on Twitter, said Tether’s blacklisting could be the result of a court ruling.
On the other hand, some noted that Tether’s decision to blacklist the validator could be seen as a necessary security measure aimed at prevent bad actors from taking advantage of exploits and vulnerabilities in the DeFi ecosystem.