The growth of layer 2 protocols has been one of the main stories of 2021, as the increasing popularity of decentralized finance (DeFi) and non-fungible tokens (NFT) have raised the costs of transactions on the Ethereum network ( ETH), making many users unable to interact on the network.
Earlier this year, the Polygon network, formerly known as MATIC, was seen as one of the top contenders in the race for an effective Layer 2 scaling solution for Ethereum, and the project’s DeFi platform, QuickSwap, was also one. of the most successful Uniswap clones.
The platform was quite popular at first, but as other platforms such as Arbitrum and Optimism emerged, discussions of Polygon fell by the wayside and some traders even refer to the platform as “slow”. Data from Flipside Crypto shows that the low-cost capabilities of the Polygon network came under attack after a cleverly devised arbitrage bot turned 14 Ether into 218.5 Ether in less than four months.
The bot filled every block with junk transactions
According to data from Flipside Crypto, the attack began in early May and at one point in June, transactions sent on the Polygon network reached 8 million a day. In the same period of time, the maximum number of transactions on the Ethereum network was 1.2 million.
Data found on a Polygon forum indicates that the attacker has been inflating transaction volumes by up to 90% by filling each block with “junk transactions”, while only having to pay about 0.02 MATIC to spam the entire block and approximately USD 1,000 to do it all day.
A more detailed analysis of the transactions and addresses that interact on the network revealed that around 30% of the network’s transaction count came from two contracts that have been determined as arbitrage bots that perform thousands of daily transactions to various decentralized exchanges ( DEX).
The exact reason the attacker chose to fill each block when the bots were only performing 2,000-4,000 trades a day is uncertain, but one theory is that they did so in an effort to prevent someone else from getting ahead of the trade.
The bot made an average of $ 6,800 in profit per day
Over a period of 120 days, the bot was able to grow an initial amount of 14 Ether to 218.5 Ether, which is currently worth $ 813,694.
This translates to daily earnings of about $ 6,800 on average before including the cost of spam on the network.
In response to the attacker, the team behind Polygon ultimately decided to increase the minimum cost of a transaction from 1 gwei to 30 gwei as a way to combat spam and improve network health.
The measure appears to have achieved its objective, as data provided by Delphi Digital shows that the increase in average transaction costs coincided with a marked decrease in the number of daily transactions, given that it now costs $ 30,000 to spam the network throughout one day.
Data from the network shows that spam transactions have dropped from 2 million to 500,000 transactions a day, a decrease of 75%, but still account for 16.7% of daily transactions. This means that the bots are spending roughly $ 5,000 of their daily earnings of $ 6,800 on gas fees to keep the scheme running.
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