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    The Money Making Machine Behind the Polygon Spam Attacks

    By staff
    Polygon Spam Attacks 1

    The Money Making Machine Behind the Polygon Spam Attacks

    Since May, there’s been a lot of talk about Polygon “flipping” Ethereum — at first in terms of transaction count (at its peak, there were 8M transactions per day happening on Polygon, compared to 1.2M TPD on Ethereum) and just last week in terms of active user count, it recorded 566,516 active addresses, marking a historic milestone.
    Despite its success, Polygon faced challenges. Reports on a Polygon forum suggest a spam attack since May, inflating network utilization by 90%. Users sent purposeless transactions, solely paying gas fees.

    At a gas price of 1 gwei or 0.000000001 MATIC/gas, and a 20 million gas limit per block, flooding a complete Polygon block costs approximately 0.02 MATIC, equivalent to $1,000 for an entire day.

    While flooding a complete block is inexpensive, the question remains: What motivates such actions?

    This piece elucidates the mechanics of spam transactions and the associated profits. Our investigation proposes that raising gas fees to 30 gwei might prove highly effective in addressing this issue.

    Access Polygon data here

     

    The Arbitrage Bot Behind these Spam Attacks

    Identifying the Sender

    The top 10 DApps record 3 million weekly transactions, roughly 420k daily. Despite this, the entire network processes 4M-6M daily transactions, leaving over 90% unaccounted for. Where do the remaining transactions originate?

    With a simple query we were able to find the top 10 addresses in terms of total transactions. The top two contracts, “0xa81ce04168e41a47f68a975d67a00fbef729af9b” and “0x84e5bc3df0df0f543648f250443c6f4077218312,” have been interacting with 2 million transactions daily — which accounts for roughly 30% of the network’s total transaction count.

    Source: Polygon dashboard

    Looking at the details of their transactions, we can see that these two contracts are arbitrage bots. They are the target of millions of transactions every day, and initiate thousands of daily transactions to DEXes themselves.

    Identifying the Recipient

    Source: Transaction

    In the described transaction, the contract sent 0.153 MATIC valued at 0.23$ and received 4.33 MATIC worth 6.5$.

    An arbitrage bot takes advantage of differing exchange rates across platforms for profit. For example, if Uniswap quotes 3700$ / ETH and Sushi offers 3600$ / ETH, the bot can simultaneously buy on Sushi and sell on Uniswap, exploiting the 100$ difference.

    The comprehensive scenario is evident: spam attack transactions act as triggers for arbitrage bots to conduct transactions on decentralized exchanges (DEXes), leveraging market discrepancies to generate profits.

    When graphing the total transactions initiated by these bot contracts, it becomes apparent that they execute approximately 2,000 – 4,000 transactions daily, a frequency that is not uncommon in such activities.

    Source: Polygon dashboard

    By visualizing the total transactions initiated by these bot contracts, it’s evident they conduct approximately 2,000 – 4,000 transactions daily, a frequency typical for such activities.

    The likely theory proposes the owner spams the contract to prevent others from front-running the actual trade. Rather than relying on priority fees for the first block position, they flood it with noise. The question arises: is purchasing an entire block genuinely more cost-effective than paying exorbitant fees for priority?

    How much is this spammer making?

    By tracking the contract creator we can see that the bot was initially funded with 14 ETH (~$3,775) and made multiple transactions back for a total of 218.5 ETH (equivalent to ~$825,000 at the time of writing) that was bridged back to Ethereum.
    Over the last 120 days, the bot has been running with an average of $6,800 a day in profits, showcasing consistent profitability during this period.

    Increasing Transaction Fees

    On Oct. 5, 2021, the network’s co-founder suggested raising the minimum transaction fee from 1 gwei to 30 gwei, elevating the cost of spamming a whole day to $30,000, aiming to discourage spam transactions.
    Shortly after the adjustment, the spam transactions dropped 75% the shift in transaction fees from 2M to 500k TPD led to a 50% decrease in Polygon’s daily transactions, dropping from 6M to slightly over 3M TPD, as clearly depicted in the graph above.
    As shown in the graph above, the network’s utilization rate also dropped down from 90% back to 60% which is a healthier rate. This leaves a lot of room for others to build on Polygon.
    Despite a 75% reduction, spam transactions still constitute 16.7% of the network’s daily transactions. Bots continue to spend approximately $5,000 daily at the current gas price, representing 83% of their daily profit to sustain this operation.

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