New Landscape of MEV on Solana: The Rise of Atomic Arbitrage

With the launch of personalized priority fee options and anti-trap measures by the decentralized exchange (DEX), the profits from sandwich attacks on the Solana chain have significantly declined. As of May 6, this figure has dropped to 582 SOL, far below the average daily profit of 10,000 SOL for a single attack bot just a few months ago. However, this is not the end of MEV; a new type of atomic arbitrage is becoming a major source of trading on the Solana chain.

Data shows that the proportion of atomic arbitrage on-chain has reached an astonishing level. On April 8, the tip ratio contributed by atomic arbitrage was as high as 74.12%, and during other times, it has basically remained above 50%. This means that currently on the Solana chain, one out of every two transactions could potentially 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 another form of "harvesting"?

Atomic Arbitrage: A New Approach to MEV Trading

Atomic arbitrage is a method of executing multi-step arbitrage operations within a single, atomic blockchain transaction. A typical operation includes buying an asset at a low price on one DEX and then selling it at a high price on another DEX within the same transaction. This approach inherently eliminates counterparty risk and some execution risks found in traditional cross-exchange arbitrage.

Atomicity is not designed for Arbitrage, but is an inherent property of blockchain that guarantees state consistency. Arbitrageurs cleverly leverage this feature to bundle operations that would normally be executed in steps and carry risks into a single atomic unit, eliminating execution risks from a technical standpoint.

Compared to 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 Easy Profits and Harsh Reality

Recent data shows that there seems to be considerable profit potential in atomic arbitrage on the Solana blockchain. In the past month, atomic arbitrage has yielded 120,000 SOL (approximately $17 million). The address with the highest profit had a cost of only 128.53 SOL and generated a return of 14,129 SOL, with a return rate of up to 109 times. The largest single profit is even more astonishing, earning 1,354 SOL from an expenditure of just 1.76 SOL, with a single profit rate of 769 times.

Statistics show that there are currently 5,656 atomic arbitrage bots, with an average profit of 24.48 SOL (3,071 USD) per address and an average cost of about 870 USD. The monthly return rate reaches 352%, which seems to be a good business.

However, this data only reflects the on-chain transaction costs, ignoring other inputs behind atomic arbitrage. Actual operations require hardware support such as private RPC and high-configuration servers, with monthly costs ranging from $150 to $500, which is just the minimum threshold.

Instance analysis shows that in the past week, only 15 addresses earned more than 1 SOL, with the highest being 15 SOL, while most others were below 1 SOL, and many were even in a state of loss. Considering the costs of servers and nodes, most bots may be at a loss, and many addresses have chosen to stop arbitrage.

Unveiling the Fog of "Risk-Free" Arbitrage

Although the overall data shows that the atomic arbitrage bots on Solana are in a profitable state, they are also constrained by the "80/20 rule." A small number of high-level arbitrage bots have obtained significant profits, while the majority of participants have become the new "leeks."

The key to atomic arbitrage lies in discovering arbitrage opportunities. For example, a transaction with the highest profit seized a loophole in a trading pool with scarce liquidity, achieving substantial gains by exploiting the oversight of large holders regarding the pool's depth. However, such opportunities are extremely rare, more akin to "winning the lottery."

The recent rise of atomic arbitrage is partly due to some developers packaging it as a "guaranteed profit" business, offering a free version for novice users and charging a 10% profit share. They also charge subscription fees by providing services such as node setup and server configuration.

However, most users have limited technical understanding and use similar arbitrage opportunity monitoring tools, resulting in minimal profits that may not even cover basic expenses. Unless equipped with unique monitoring tools and high-performance configurations, participating in atomic arbitrage is likely to just change from "getting cut by trading" to "getting scammed by buying servers and subscription fees."

As the number of participants increases, the probability of arbitrage failure is also rising. The failure rate of a certain high-yield program's trades has reached over 99%, and participants still need to bear on-chain fees.

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