Some Basic Concepts:
- Gas Fee (GAS)
- Gas = Transaction Fee on the Blockchain
- Pay Miners/Validators to Process Your Transaction
- High Gas → Transaction Prioritized for Inclusion
- Low Gas → May Get Stuck in the Queue
Payment Methods:
- SOL Transaction → Pay in SOL
- ETH Transaction → Pay in ETH
- Different Chains Have Different Gas Mechanisms
Slippage
Slippage = Deviation between Expected Price and Actual Execution Price
Causes of Slippage:
- Insufficient Market Depth → Large Order Size, but Insufficient Pool Liquidity
- Transaction Delay → Price Fluctuates Between Submission and Execution
- MEV Sandwich Attack → Bots Manipulate Prices for Arbitrage
Example:
You use 1000 USDC to buy ETH, expected price 2000 USDC/ETH, should get 0.5 ETH.
But the execution price becomes 2050 USDC/ETH, you ultimately only get 0.4878 ETH, your slippage = 2.5%.
If you set slippage at 0.1%, the transaction would fail directly due to insufficient slippage.
MEV Sandwich Attack How to Sandwich You?
Sandwich Attack Mechanism:
- Front-run → Bots Buy Before You, Pushing Up the Price
- Your Transaction Executes → You Can Only Trade at a Higher Price, Bearing Slippage Loss
- Back-run → Bots Immediately Sell to Profit from Your Slippage
Impact:
- Your Buy-in Price is Inflated, Transaction Cost Increases
- Bots Arbitrage Your Slippage, Making You Buy High and Sell Low
Sandwich on Solana vs Ethereum:
- ETH → Bots Precisely Insert Sandwich Transactions
- SOL → MEV Bots Batch Submit Orders, Casting a Wide Net to Sandwich Users
How to Avoid Being Sandwiched?
Enable MEV Protection to Reduce the Likelihood of Your Transaction Being Monitored
- Priority Fee, Also Called a Bribe
- Priority Fee = Extra Tip You Pay to Miners/Validators to Expedite Your Transaction
Components:
- Base Fee → Network Base Cost (Solana is Fixed, ETH is Dynamic)
- Priority Fee → Extra Tip You Pay to Increase Transaction Priority
Functions:
- Increase Transaction Inclusion Priority, Get Your Transaction on-Chain Faster
- In MEV Competition, Transactions with Higher Priority Fees Will Be Executed First
Conclusion
The Final Transaction Cost is Determined by On-Chain Gas Fee + Slippage (Including the Slippage You Set and the Impact of Your Buy Amount on the Pool) + MEV Sandwich.
Practical Case:
Many People Rush to Buy on-chain Memes on Solana, Using 50% Slippage + MEV Protection, Is This Safe?
- Most on-chain Memes are AMM Trades
- You Use 1000 USDC to Buy a Token, Slippage 50%, This Allows Extreme Price Execution
- MEV Bots Front-run, Inflate the Price (Within Your Acceptable Slippage Range)
- Your Transaction Executes at a Higher Price, You Receive Less of the Token Than Expected
- MEV Bots Immediately Sell to Profit from Your Slippage Loss
If MEV Protection is Effective:
- Your Transaction Won't Be Precisely Sandwiched (Bots Can't Insert Orders Before and After)
- The Pool Has Sufficient Liquidity, Your Buy Amount Won't Impact the Price, So the Transaction Executes Normally
If Not Effective:
- Solana Doesn't Have a Private Mempool, MEV Bots Can Still See Your Transaction and Sandwich You
If Your Buy Amount Impacts the Pool:
- High Slippage = Allowing Extreme Price Fluctuations, The Market Volatility Itself May Cause Losses
- Low Liquidity Pool = Greater Transaction Impact, Easier to Get Stuck
How to Avoid Being Sandwiched?
- Don't Use High Slippage, Set a Reasonable Slippage Range
- If Using AMM, Enable MEV Protection to Reduce the Risk of Being Monitored
Is High Slippage the Key to Rushing on-chain Memes Successfully?
- Most on-chain Memes Don't Have Such High Short-term Volatility, Excessive Slippage Ranges Don't Provide Additional Success Rates.
- More Important Factors are Your Priority Fee + Your Transaction Node + Pool Routing Choices. These Can Continuously Improve Your Transaction Success Rate. Slippage is Just an Option in Certain Extreme Cases. 10-20% Slippage is Usually Enough for Most on-chain Meme Hunting. This Part Can Be Manually Adjusted Multiple Times During the Hunt to Control Risk.
- For Small Investors, It's All About Small Bets, Single Buy-in Amounts Aren't Large, Adjusting Slippage a Bit Can Avoid Most Sandwich Situations.
Conclusion:
When the Trading Platform is an AMM (Raydium), the Slippage Parameter Determines the Probability of Being MEV Sandwiched
If You Set a High Slippage, You Need to Evaluate:
- Whether the Gas Fee is High Enough to Avoid MEV Bots Front-running
- Whether Your Buy Amount is Large Enough for MEV Bots to Profit
- Whether the Liquidity Pool is Deep Enough, Otherwise You May Hit the Slippage Limit
- Splitting into Small Batches and Reducing Slippage Can Greatly Reduce the Risk of Being Sandwiched and Losing in Small Pools
How Much Slippage? How to Define Small Amounts?
This Can Only Be Learned Through Practical Experience! Just Like Driving a Manual Transmission, It Requires Practice!
