Inside Solana MEV Mechanisms: 3 Strategies Dominating the Chain
A deep dive into the most exploited mechanisms by MEV bots on Solana. How value is extracted, and what it reveals about the chain’s economic design.
⌜MEV on Solana: The 3 Dominant Strategies⌝
On Solana, arbitrage isn’t just about spotting price gaps between two DEXs. Thanks to ultra-fast execution and low transaction fees, the network enables highly advanced arbitrage strategies used daily by MEV bots.
⌜What is MEV Mechanism⌝
MEV (Maximal Extractable Value), refers to the set of techniques used to extract additional value by reordering, inserting, or censoring transactions within a block.
On Solana, MEV mechanisms leverage fast execution, private mempool access, and infrastructure like Jito or Firedancer to strategically prioritize or manipulate transactions.
Typical strategies include:
Arbitrage
Liquidations
Sandwich attacks
Often executed by bots, these operations highlight both the technical efficiency of Solana and the ongoing challenges around fairness and transparency in on-chain markets.
⌜🔄Arbitrage⌝
Concept: Exploiting price inefficiencies for identical assets across Solana DEXs (e.g., Orca, Phoenix, Raydium, Lifinity) through atomic execution
Execution Flow:
Continuous on-chain monitoring of price feeds across liquidity pools.
When a price discrepancy is found, the bot buys the token where it’s cheaper and sells it where it’s priced higher.
Execution is near-instant, typically via atomic swaps (CPI calls), optimized multi-hop routing (Jupiter), or their own custom trading programs.
Example :
Trading Pair: SOL/USDC
DEX 1: Raydium Price: $167.00 (Liquidity: 500 SOL)
DEX 2: Phoenix Price: $168.41 (Liquidity: 200 SOL)
Opportunity:
Buy: 200 SOL on Raydium $167.00 → Cost: $33,400
Sell: 200 SOL on Phoenix $168.41 → Revenue: $33,682
Gross Profit:
$282 ($1.41 per SOL spread)
Last month, arbitrage bots executed approximately 1.2 billion transactions on Solana.
⌜📉 Liquidation⌝
Concept: On lending protocols like MarginFi, Drift, or Solend, when a loan breaches its collateral ratio, a liquidator can repay part of the loan and claim the collateral with a bonus.
How it works:
Bots monitor at-risk accounts across lending platforms via protocol APIs or Geyser streams.
Once a loan’s collateral ratio drops below threshold, the bot triggers liquidation.
It repays a portion of the debt and receives a larger amount in collateral → net profit.
Example :
A user on MarginFi takes out a loan in $USDC backed by $SOL.
→ Loan: 1,000 USDC (Collateral: 10 SOL @ $160) Liquidation: 85% LTV
The value of $SOL drops, pushing the position below the liquidation threshold.
→ Price Drop: SOL → $150 (LTV now 90%)
A liquidator repays $500 USDC and receives $540 worth of $SOL.
→ Repays 500 USDC (50% of debt) → Receives 3.6 SOL ($540 at $150/SOL)
→ Profit: $40 (8% bonus) + gas covered
Liquidators processed $28M in Solana liquidations (Marginfi/Drift/Jito, in 2024 ).
⌜🥪 Sandwich Attacks (Front-Back Running)⌝
Concept: Inserting transactions around a victim’s swap to exploit price slippage, profiting from the induced market movement and capture the slippage.
How it works:
Detection: Bots monitor private mempools for large pending swaps.
Front-Run: It front-runs by buying SOL first, before the victim’s trade executes.
Victim Impact: The victim’s swap artificially inflates the price due to low liquidity.
Back-Run: The bot selling the SOL at the new higher price, capturing the slippage as profit.
→ Profit = price difference induced by the user's trade.
Example :
Target Trade:
A large inbound swap is detected on Orca 10K $SOL → $USDC
(initial price: $162.50).
Bot Action:
Front-run: Buys 500 SOL @ $162.50 → $81,250
Victim’s impact: trade executes → Price spikes to $163.30
Back-run: Sells 500 SOL @ $163.30 → $81,650
Profit:
→ The bot back-runs to capture the slippage and extract profit, $400 (0.5% of victim’s trade size) According to tracking data, sandwich attacks extracted approximately 16M SOL from Solana over the past 30 days
⌜Final Summary⌝
Solana hosts a rapidly evolving MEV ecosystem. Understanding these three core mechanism methods provides crucial insight into how value flows on-chain and helps builders, traders, and curious minds stay competitive in a decentralized financial future.
On Solana, MEV is live-action every block.
It’s no longer just about capturing a spread. It’s about understanding how the network’s architecture enables extraction. These three strategies arbitrage, liquidations, and sandwich attacks form the core of what bots relentlessly harvest, block after block.
As Solana evolves with Jito, staking-based bundles, and dynamic fee markets, the nature of MEV will shift.
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