Resources

People often ask me "How did you learn how to hack?" The answer: by reading. This page is a collection of the blog posts and other articles that I have accumulated over the years of my journey. Enjoy!

The author of this post created a long-tail MEV strategy around the hourly Bean emissions on the Beanstalk protocol. By coordinating with several other MEV's, they were able to collectively earn money instead of running the marginal cost to zero. This is a classic prisoners dilemma problem. After the decrease of the output by 95%, only a single actor remained. The author decided to get in on the action!

One of the functions sunrise() or gm() needs to be called once an hour with up to a 5 minute relay. The reward amount appears to be dependent on how fast the function was called.

The initial strategy is simple: call the same function one second faster than their competitor. If they did this, their competitor would do the same. Eventually, this would hit the minimum award and nobody would be winning. To deal with this game theory issue, they decided to share the rewards. This made sure that A) they maximize the profits coming from the Beans and B) it's distributed equally. The overall gain is better in the cooperation case so this works.

To do this, they created a smart contract called the Pact. Only two people can call the contract. Once the beans are received they are perfectly split and sent to each other evenly. This sounds fine and danty but there are some issues with this... sybil attacks are real. Anyone can undercut at anytime.

How do you contact the person on chain? They tried sending a UTF-8 but that didn't work. They tried splitting the funds manually and that didn't work. Finally, they tried undercutting the bot but this led to the other bot doing more undercutting until it ran to zero. After 3 weeks of doing this, the author of the other bot said they would use the new one instead of their own.

Once they started this up, they ran into a few issues. First, congestion of the gain would lead to higher gas prices. When this happened, the other bot would call the main contract directly and undercut them. Since this wasn't all the time, it was okay. But then another player enter the game. They thought about burning out the competition but decided to let a third person in. The other bot (second one) tried undercutting the third bot but they stayed around. Eventually, the second bot released a contract that contained a 40-40-20 split. The third bot created a new contract that had a perfectly even split.

They thought of ways to fix this problem for themselves. Undercut slightly to gain a profit. Make a new contract with better proportions. Burn out the competition until they become uninterested. They tried undercutting occasionally but it didn't work; stray bots would come and then race to zero. From there, they created a new pact with the second operator and cut the third out entirely. This new contract also included an escape hatch if one of the parties wasn't co-operating.

Overall, a great post into the wild world of MEV and game theory!