Exchange aggregator 1inch released a new tool called “Rabbithole” on Nov. 25 that the company says will protect traders from malicious “sandwich attacks.” The team announced the launch of the tool in a press release made available to Cointelegraph.
Rabbithole works by allowing users to send transactions directly to Ethereum nodes, bypassing the mempool. In order to use it, users need to change the Remote Procedure Call (RPC) endpoint in their cryptocurrency wallet. After that, every swap initiated via 1inch will be analyzed by the private TX routing algorithm developed by the 1inch team and then sent directly to the validators if there is a possibility of a sandwich attack.
According to the press release, the “sandwich attack” is a species running cryptographic fonts which consists of three steps:
- The attacker scans the mempool of the blockchain until it finds a transaction with a high value
- A transaction is sent to pre-trigger the victim’s purchase, and a higher gas is paid to ensure that the attacker’s transaction is processed before the victim’s. This early transaction pumps up the price of the coin to be purchased, causing the victim to pay more
- After the victim’s transaction is processed, the attacker sends a second transaction that sells their coins, pocketing the difference in price.
This type of attack is so named because it “stacks” the victim’s transaction between two transactions entered by the attacker.
According to a TarLogic report titled “Tracking Ether Blockchain Crypto Attackers: Measuring Sandwich Attacks,” more than 60,000 Ether (ETH) was lost in sandwich attacks from May 2020 to April 2022 – worth over $72,000,000 at the time of publication.
The crypto R&D team, Flashbots, previously released a python library that allowed users to send transactions directly to nodes. However, this library can only be used in a development environment. According to 1inch, Rabbithole is a library that works similar to Flashbots, but also includes a user-friendly frontend for users.
The Rabbithole is the latest in a series of upgrades to the 1-in decentralized exchange (DEX) aggregator. In August 2021, the team launched the Ethereum Layer 2 version on optimism and in November 2021, new network router to optimize gas costs.