From Vulnerability to Resilience: How Chainnodes Dedicated Nodes Help Traders Prevent MEV Attacks

From Vulnerability to Resilience: How Chainnodes Dedicated Nodes Help Traders Prevent MEV Attacks

Brief

Understand how Chainnodes Dedicated Nodes prevent trade exploitation and protect cryptocurrency trading from constant MEV attacks like front running and prevents high slippage rate due to network congestion or delay.

Learn about other features of Chainnodes' Dedicated Nodes here

As of June 9, 2024, approximately 526,207 ETH has been extracted from the Ethereum network through Maximal Extractable Value activities. This underscores a growing need for secured infrastructure and safe decentralized exchanges in an ecosystem like the cryptocurrency space where precise and reliable price movement are crucial factors for traders aiming to maximize profits.

Popularly dubbed the "invisible tax," MEV (Maximal Extractable Value) attacks could be the reason behind the significant slippage you're experiencing during cryptocurrency transactions. Picture this: you initiate a $10,000 trade on your preferred decentralized exchange, but the transaction fails multiple times. Frustrated, you increase the slippage tolerance, effectively agreeing to pay a higher price for the same asset. While this might be like a symptom of low liquidity, the reality is that MEV bots could be manipulating the order flow by reordering transactions to artificially inflate slippage and drive up asset prices.

How MEV attacks affect your transactions

MEV can attack your order in three ways: by increasing asset price, increasing applicable gas fees, or increasing slippage. Several factors, aside from actual market movement, can impact the price of an asset and determine how much you spent in total to buy it (Asset price + Gas Fees + Slippage). To protect your trades, it is essential that you proactively engage suitable blockchain infrastructures that protects transactions from MEV.

See previous article on MEV exploitative strategies like frontrunning and sandwich.

How Chainnodes Dedicated Nodes Prevent MEV Attackers

The Chainnodes dedicated node is a specially designed server that allows traders to enjoy private and secure access to the blockchain. Using the Chainnodes dedicated node, you get exclusive access to the blockchain, ensuring fast transaction and reducing the risk of attack. With it, you can prevent MEV bots from detecting your transactions and exploiting them.

Instances of MEV attacks and how Chainnodes Dedicated Nodes help prevent them

  • Preventing Frontrunning with Chainnodes Dedicated Node Exclusive and Private Access

When you initiate a transaction on the blockchain, your order is added to the public mempool where validators can access it for verification and finalization. Using a public or shared node for trades gives MEV bots the chance to detect your transaction and manipulate it. This is a why an exclusive and private access to the blockchain is crucial for trade security.

Replacing public nodes with the Chainnodes dedicated node grants traders a direct connection to the blockchain using a private mempool that hides trades from the MEV bot and ensures that transactions are completed without interference. This direct connection does not only protect crypto transactions but also eliminates latency issue and improves overall trading experience.

  • Preventing Backrunning with Dedicated Node through Chainnodes' Transaction Isolation Technique

A backrunning attack is another MEV exploitative trick where the searcher bot notices a large order and places an order right after it to benefit from the price increase. The truth is high-volume trade can increase cryptocurrency prices significantly, but that is not a good news if malicious actors (MEV bots) are always on the lookout to exploit the increase at the expense of other traders.

By establishing a direct communication with the blockchain, Chainnodes dedicated node offers traders a transaction isolation technique that ensures that transactions bypasses the public mempool and is sent directly to a validator. This approach prevent backrunning attack and ensure that asset's price is a direct reflection of market conditions.

  • Preventing Sandwich Attack with Chainnodes Dedicated Node Using Customized Strategies

A sandwich attack is a combination of frontrunning and backrunning. What this mean is that a searcher or MEV bot artificially alters asset prices by placing an order before and after an honest order to make a profit. For instance, he buys at the current market price, waits for a high-volume order to be completed, and sells after it to make profit from the significant change in price.

As a trader, using Chainnodes' dedicated nodes allows you to trade using customized strategies that can prevent all types of MEV attacks. This includes using strategies like slippage protection, gas fee management, and transaction ordering with timestamps to establish conditions for transaction execution.

Conclusion

While the above are ways to protect transactions from MEV attacks, the Chainnodes Dedicated Nodes offer additional benefits for traders who are looking to improve their overall trading experience. Along with transaction protection, dedicated nodes also eliminate latency issues while offering advanced trading security through encryption and IP protection, making it ideal for arbitrage and high-volume traders.