Exchange aggregator 1inch released a new tool called “Rabbithole” on Nov. 25, which the company says will protect traders against malicious “sandwich attacks.” The team announced the launch of the tool in a press release that has been made available to Cointelegraph.
Rabbithole works by allowing users to submit 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 crypto wallet. After that, each swap initiated via 1inch will be analyzed by the private tx routing algorithm developed by the 1inch team and then sent to validators directly if there is a possibility of a sandwich attack.
According to the press release, a “sandwich attack” is a type of crypto font-running that consists of three steps:
- The attacker scans the blockchain’s mempool until it finds a high-value transaction
- A transaction is submitted to front-run the victim’s purchase, and higher gas is paid to make sure that the attacker’s transaction gets processed before the victim’s. This early transaction pumps the price of the coin that is about to be purchased, causing the victim to pay more
- After the victim’s transaction is processed, the attacker submits a second transaction that sells their coins, pocketing the difference in price
This type of attack is so named because it “sandwiches” the victim’s transaction between two transactions submitted by the attacker.
According to a report by TarLogic, titled, “Tracking Ethereum blockchain crypto attackers: Measuring sandwich attacks,” over 60,000 Ether (ETH) was lost from sandwich attacks from May 2020 to April 2022 — a value of over $72,000,000 at the time of publication.
The crypto R&D team, Flashbots, had previously released a python library that allowed users to submit transactions directly to nodes. However, this library could only be used in a developer environment. According to 1inch, Rabbithole is a library that works similarly to Flashbots, but it also includes a consumer-friendly frontend for users.
Rabbithole is the latest in a string of upgrades to the 1inch decentralized exchange (DEX) aggregator. In August 2021, the team launched an Ethereum layer 2 version on Optimism and in November 2021, a new mainnet router to optimize gas costs was implemented.