Ethereum experienced a record payday in maximum extractable value (MEV) block rewards, as a result of a tumultuous exploit on certain liquidity pools on the decentralized exchange Curve Finance.
Yesterday was the most lucrative for MEV since last year’s Merge, with an estimated 6,006 ETH ($11.1 million) paid out as MEV rewards to validators, according to data from mevboost.pics.
On-chain data retrieved from the Ethereum blockchain highlighted multiple slots (standard periods of 12 seconds for full Ethereum blocks) with significant MEV rewards.
Slot 6,992,273 saw a reward of 584 ETH ($1.08 million), slot 6,993,342 had a 345 ETH reward ($641,000), and slot 6,992,050 followed closely with a 247 ETH reward ($459,000), as first observed by analyst and investor Eric Conner. All three occurred within the last 24 hours. These are significant given an average MEV payment is only 0.060671 ether ($111) per block.
Ethical vs. malicious: The race to control Curve funds
This surge in MEV rewards coincided with a security exploit on Curve Finance. Yesterday, an attacker exploited a reentrancy vulnerability in certain Curve liquidity pools, leading to the misappropriation of more than $52 million.
In the ensuing chaos, ethical hackers and malicious actors vied against each other: the former aimed to safeguard the funds while the latter tried to capitalize on the vulnerability. Both groups ended up paying high MEV rewards to ensure their transactions were accepted into new Ethereum blocks as soon as possible.
In an act of ethical hacking, an MEV bot operator, identified by the ENS name ‘c0ffeebabe.eth’, returned 2,879 ETH ($5.4 million) back to Curve Finance. These funds had previously been taken off from the CRV-ETH liquidity pool during the exploit. C0ffeebabe.eth was able to front-run a malicious hacker, securing the funds.
© 2023 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.