1inch, a leading cryptocurrency exchange aggregator, released the Rabbithole tool on 25 November, aimed at protecting users against sandwich attacks. Rabbithole allows users to send transactions to Ethereum [ETH] nodes directly, bypassing the mempool.
Users must change the Remote Procedure Call (RPC) endpoint in their crypto wallet to use it. Post this, each swap initiated via 1inch will be analyzed by the private transaction routing algorithm. It will be sent directly to validators if a sandwich attack seems feasible.
How does Rabbithole work?
When a bot detects a large pending swap trade, it executes two transactions. One takes place before and another after the trade, effectively sandwiching the victim’s trade. Extra gas fees are paid to get the first transaction directly before the victim’s trade.
A sandwich bot detects the trade and executes a buy transaction for Y immediately prior to the victim’s trade, and a sell transaction for Y immediately following the victim’s trade.
Fewer sandwich attacks now, but concerns persist
A June 2022 report by Tarlogic revealed that during May 2020-April 2022, there were 457,691 sandwich attacks, which netted around 60,000 ETH in profit. There was an apparent decrease in the number of attacks after April 2021, but concern around such attacks remained.
Source: 1inch
However, the ROI percentage remained fairly constant over time, even though the number of attacks decreased.
Source: Tarlogic
This phenomenon showcased hackers’ consistent attacks on wallets. Even though the average benefit falls relatively short at 0.15 ETH, the total value of such attacks is very high. Furthermore, while some crypto wallets such as 1inch Wallet, Ledger, and Trezor can create and sign a transaction, RabbitHole will specifically benefit MetaMask users.