New Trends in Solana on-chain MEV: Atomic Arbitrage Takes Half of the Trading Market

Recently, the profits from sandwich attacks on the Solana blockchain have significantly declined. As of May 6, this figure has dropped to 582 SOL, far below the average daily earnings of 10,000 SOL per attack bot a few months ago. However, this does not mark the end of MEV; a new type of atomic Arbitrage is becoming the primary source of trading on the Solana blockchain.

Data shows that the share of atomic arbitrage on-chain has reached an astonishing level. On April 8th, the tip ratio contributed by atomic arbitrage was as high as 74.12%, and during other times, it generally maintained above 50%. In other words, currently, one out of every two transactions on the Solana chain may be atomic arbitrage.

Nevertheless, discussions about atomic arbitrage on social media are few and far between. Is this emerging arbitrage opportunity a hidden treasure or just another form of a trap tool?

Atomic Arbitrage: A New Approach to MEV Trading

Atomic arbitrage refers to executing multi-step arbitrage operations in a single, atomic blockchain transaction. A typical operation involves first buying an asset at a low price on one decentralized exchange and then selling it at a high price on another exchange within the same transaction. This method eliminates counterparty risk and some execution risk found in traditional cross-exchange arbitrage.

Atomicity is an inherent fundamental property of blockchain that ensures state consistency. Arbitrageurs cleverly utilize this feature to bundle operations that would traditionally need to be executed in steps and carry risks into a single atomic unit, thereby eliminating execution risk from a technical standpoint.

Unlike traditional sandwich attacks or automated trading bots, atomic arbitrage focuses more on discovering price differences across multiple trading pools to seize arbitrage opportunities.

The Myth of Huge Profits and Realistic Dilemmas

On the surface, atomic Arbitrage seems to have considerable profit potential. In the past month, atomic Arbitrage on the Solana blockchain has earned 120,000 SOL (approximately $17 million). Among them, the address with the highest profit spent only 128.53 SOL to gain 14,129 SOL in profit, achieving a return rate of 109 times. The maximum single profit even reached 769 times.

Currently, there are 5,656 atomic arbitrage bots recorded, with an average profit of 24.48 SOL (3,071 USD) per address and an average cost of about 870 USD. This means a monthly return rate of up to 352%.

However, this data only reflects on-chain transaction costs and overlooks other investments behind atomic arbitrage. In reality, executing atomic arbitrage requires hardware support such as private RPCs and high-performance servers, with monthly costs ranging from $150 to $500. Considering that to increase arbitrage speed, it is usually necessary to configure servers with multiple IP addresses, the actual costs may be even higher.

Case analysis shows that in the past week, only 15 addresses had earnings exceeding 1 SOL, with the highest being 15 SOL. Most addresses earned less than 1 SOL, and some were even in a state of loss. If server and node costs are accounted for, almost all bots may be in a state of loss.

The Mystery of Profit: Unveiling the Fog of "Risk-Free" Arbitrage

Although the reality contradicts the overall data, the atomic arbitrage bots on Solana are still in a profitable state overall. This aligns with the "80/20 rule", where a small number of high-level arbitrage bots have gained significant profits, while others have become the new "chives".

The key to atomic Arbitrage lies in discovering arbitrage opportunities. Taking the most profitable transaction as an example, this transaction exploited a vulnerability in a trading pool with scarce liquidity, seizing an opportunity that a large trader overlooked regarding the pool's depth. However, such opportunities are extremely rare, and numerous on-chain bots are competing for similar chances.

The recent rise of atomic Arbitrage may stem from some developers packaging these arbitrage opportunities as a "guaranteed profit" business, offering a free version for novice users and taking a 10% profit share. In addition, they also charge subscription fees by providing services such as node setup and server configuration.

In fact, due to most users' limited understanding of technology, the arbitrage opportunity monitoring tools used are quite similar, ultimately resulting in little profit, and may even fail to cover basic costs.

Unless one has a certain technical background, possesses a unique arbitrage opportunity monitoring tool, and configures high-performance servers and nodes, most participants in atomic arbitrage may simply transition from getting scammed by trading coins to being scammed by buying servers and subscription fees. As the number of participants increases, the probability of arbitrage failures is also rising. For example, one program with the highest yield currently has a transaction failure rate exceeding 99%, and participating bots still need to pay on-chain fees.

Before diving into the seemingly enticing "atomic arbitrage" wave, potential participants should remain clear-headed, fully assess their own resources and capabilities, and be wary of those overly packaged "guaranteed profit" promises to avoid becoming victims in the new round of "gold rush."