Bots are front-running bots front-running Base meme coins

Bots are front-running other bots in the hopes of front-running meme coin traders. Welcome to the degenerate world of Ethereum layer 2 tokens.

Posting to X (formerly Twitter), meme coin trader GK screenshotted four examples of traders building bots to front-run other meme coin traders’ bots.

Specifically, a bot is executing an identical sequence of layer 2 blockchain actions across various meme coins on Base, the Coinbase-operated layer 2 atop Ethereum’s layer 1 blockchain. (A layer 2 is a more centralized version of a regular, layer 1 blockchain.)

Front-running meme coins

This clever actor deposits a small amount of capital into a liquidity pool for trading newly-launched meme coins. It then waits for so-called ‘launch bots’ to detect its small liquidity deposit. 

Because these launch bots believe that a new coin has launched and is gaining attention, by virtue of its recent minting and liquidity events, the launch bot adds additional liquidity. Its owner thinks that this is a clever strategy — joining in early to possibly the next memetic rally.

The front-runner then sells into their additional liquidity, effectively front-running their attempt to front-run.

Degenerate meme coin traders

A number of targets of this type of attack have included variations on asdfasdf, Internet slang for ‘bored,’ ‘filler text,’ or ‘nothing.’ To GK, naming these tokens with ticker symbols of careless convenience — i.e. whichever lefthand keyboard characters were most readily available — indicated an embrace of degenerate trading. For a while, it worked.

Most meme coins are simply jokes and their most important attribute is usually a mascot. 

Meme coin traders embrace their own degeneracy. Its shorthand, degen, has become a crypto community membership title of endearment. Coinbase and the Bored Ape Yacht Club once planned to film three movies entitled ‘Degen Trilogy.’

Apparently, the strategy of front-running front-runners works well on Base. It might also work well on other fast, cheap blockchains. The ‘front-run the front-runners’ strategy is straightforward.

  • First, thanks to Base’s fast, cheap operation, low-effort creation of altcoins is easy. This allows anyone to copy a smart contract, tweak a few parameters like ticker symbol or supply, and create their own meme coin in seconds.
  • Second, at least while meme coins are a hot category, Base is still popular enough to attract front-running ‘launch bots.’ These launch bots scan blockchains and their layer 2s for signs of promising meme coin launches — including, to their peril, fake meme coin launches with honeypot liquidity.
  • Finally, after the front-running bot has rug-pulled the launch bot, a few retail traders might still occasionally buy after both bots have traded, providing a final source of exit liquidity via a long-term rally.

Front-running, like MEV, is a perennial tax on retail traders

Although GK highlighted just one front-running campaign aiming to profit approximately 0.2 ETH per token, there are endless variations of systematic exploitation of crypto token offerings. 

Coinbase, for its part, promotes Base as a low-cost and developer-friendly layer 2 solution for Ethereum. It aims to turn Base into a decentralized ecosystem, though naturally, it has prioritized Coinbase products to date.

Read more: Bored Apes puts the ‘shit’ in shitcoin

Eventually, the operators of meme coin launch bots will stop trading after they realize that even more sophisticated front-runners are front-running their attempts at front-running.

As always, when there are degenerate retail dollars up for grabs, more sophisticated traders quickly learn how to master those markets. This week, a Base trader minted low-effort meme coins, deposited a small amount of liquidity, and then rug-pulled after launch bots took the bait. Several crypto market observers found it amusing to watch.

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