Observation | Why do miners package transactions with extremely low gas fees on Uniswap?

Author: Taylor W

With the prevalence of DeFi, Ethereum is extremely congested, but what is interesting is that when the gas price is extremely high, a phenomenon occurs on Uniswap where swaps can be successful by paying extremely low gas.

This discovery stems from an interesting experiment by the famous Ethereum scaling project SKALE Labs.

In January 2021, when DeFi transactions were growing wildly, dex transaction volume reached a historical peak throughout January. Against this background, Konstantin Kladko, CTO of SKALE Labs, initiated a discussion in the Ethereum Magician forum, which is the title of today's article: Why do miners package transactions with extremely low gas fees paid by Uniswap?

In the experiment, SKALE Labs submitted Uniswap transactions with extremely low gas fees. But interestingly, transactions that would have taken hours or even days to be accepted were accepted within minutes.

So Konstantin Kladko asked on the Magician forum: Is anyone else seeing the same behavior? Could it be related to the front-running behavior of the miner?

The question is the answer, and this kind of front-running behavior is precisely the reason for its emergence. This behavior refers to the miners buying and selling before a large number of transactions (uniswap is an AMM pool market, and the price increase of a large amount of purchases is very large), and then a large number of transactions are made, which causes the price of the trading pair to fluctuate, which can achieve arbitrage, or prompt users to urgently trade and add gas fees, and then find high gas transactions.

This is what some developers have pointed out before: Ethereum’s dark forest, arbitrage opportunities and gas fees are like prey. Predators will track profitable transactions (unpackaged transactions) throughout the Ethereum network and use arbitrage robots to arbitrage.

Arbitrage bots typically look for specific types of trades (such as DEX trades or oracle updates) in some trading pool and try to trade them in advance according to a predetermined algorithm. In general, front-running operators can make money on any compound trades they find by copying the trades and replacing the corresponding addresses with their own. They can even execute trades and then copy the profitable internal trades generated by their execution.

Later, some experimenters found the operators of these front-running through some bait transactions. They were all execution robots, and they were operated through some off-chain analysis tools.

How does a pre-emptive robot work in a broad sense?

Therefore, the technical staff of Starkware said that it would be difficult to block such transactions through the existing infrastructure (such as Infura). They proposed to establish some ways to confuse transactions, and only when the users of the contract use it can the contract's transaction execution be activated.

Even better would be if a miner could include the transaction directly in a block, skipping the mempool part and predators entirely.

The existence of Ethereum Dark Forest is a product of openness. Therefore, DeFi and various technical service providers still need to be careful about arbitrageurs and attackers. Under simple rules, there will be more attacks based on details, such as the common flash loan attacks, but it is clear that Ethereum participants need to maintain justice. Predators need dark pool assistance in most cases, which still tests the psychology of miners.

As a chain containing huge assets, Ethereum is essentially protected by miners. Miners obtain huge mining profits and need to contribute to the network.