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MakerDAO Scammed Out of $200M by Flash Loaner Making Only $3 in Profit

Key Points:

An arbitrage bot flash loaned $200 million worth of DAI from MakerDAO, making a $3.24 profit after transaction fees.
The bot took advantage of MakerDAO’s ‘DssFlash’ contract, which permits users to borrow any amount of DAI without incurring fees.
A flash loan is a type of loan that is received and paid back within a single block without any upfront collateral.

On Wednesday, an arbitrage bot borrowed $200 million worth of the dai stablecoin (DAI) from MakerDAO using the DssFlash contract.

This contract permits users to borrow any amount of DAI without incurring fees, according to crypto data provider Arkham Intelligence. After receiving the loan, the bot supplied the DAI to the Aave DAI market and borrowed $2,300 worth of wrapped ether (WETH) against it. This is where things get interesting.

With the WETH in hand, the bot quickly moved to buy Threshold Network (T) on Curve and then sold it on Balancer. These transactions all took place within a single block, thanks to the flash loan, resulting in a profit of $33 before fees.

However, the total fees incurred were nearly $30, leaving a net profit of only $3.24. While this may not seem like a lot, it’s important to note that flash loans have been used nefariously in the past. In fact, there have been a string of flash loan exploits on decentralized finance (DeFi) platforms like Platypus and 0VIX, resulting in losses exceeding $10 million.

Despite the risks, the potential rewards of using flash loans for arbitrage trading are significant. With the ability to borrow large sums of money without upfront collateral, traders can quickly take advantage of price discrepancies between different markets. Of course, this also means that flash loans are likely to remain a popular tool for those looking to make a quick profit in the DeFi space.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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Annie

Coincu News

Annie

Championing positive change through finance, I've dedicated over eight years to sustainability and environmental journalism. My passion lies in uncovering companies that make a real difference in the world and guiding investors towards them. My expertise lies in navigating the world of sustainable investing, analyzing ESG (Environmental, Social, and Governance) criteria, and exploring the exciting field of impact investing. "Invest in a better future," I often say. That's the driving force behind my work at Coincu – to empower readers with knowledge and insights to make investment decisions that create a positive impact.