GMGN Co-Founder Haze: P-Lesser General's Classroom – How to Significantly Reduce Sandwiching and Small Pool Loss Risks?
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GMGN Co-Founder Haze: P-Lesser General's Classroom – How to Significantly Reduce Sandwiching and Small Pool Loss Risks?
Like driving a car, manual transmission relies on practice!
Navigating Web3 tides with focused insightsAuthor: Haze (@haze0x)
When trading on-chain, many fundamental concepts can determine whether your trade succeeds or fails.
Modern trading tools have lowered the barrier to entry, so most users don't fully understand on-chain parameters. This article will walk you through some key basics.
Some fundamental concepts:
Gas Fee (GAS)
Gas = Transaction fee on blockchain
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Paid to miners/validators to process your transaction
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High Gas → Your transaction gets prioritized for inclusion
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Low Gas → Your transaction may get stuck in the queue
Payment methods:
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SOL transactions → Pay in SOL
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ETH transactions → Pay in ETH
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Different chains have different gas mechanisms
Slippage
Slippage = Deviation between expected price and actual execution price
Causes of slippage:
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Insufficient market depth → Large order size relative to pool liquidity
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Transaction latency → Price fluctuates between submission and execution
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MEV sandwich attacks → Bots manipulate prices for arbitrage
Example:
You use 1000 USDC to buy ETH at an expected price of 2000 USDC/ETH, expecting to receive 0.5 ETH.
But the actual execution price becomes 2050 USDC/ETH, so you only receive 0.4878 ETH — your slippage is 2.5%.
If your slippage tolerance is set to 0.1%, the transaction would fail because the required slippage exceeds your limit.
How MEV Sandwich Attacks Target You
Mechanism of a sandwich attack:
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Front-run → A bot buys just before your transaction, pushing up the price
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Your transaction executes → You end up buying at a higher price, suffering slippage loss
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Back-run → The bot immediately sells to capture profit
Impact:
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Your buy price is inflated, increasing transaction cost
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Bots exploit your slippage, making you "buy high, sell low"
Solana vs. Ethereum sandwich attacks:
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Ethereum → Precise insertion of sandwich transactions
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Solana → MEV bots submit bulk orders, casting a wide net to sandwich trades
How to defend against sandwiches?
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Enable MEV protection to reduce the chance of your transaction being monitored
Priority Fee (also known as "bribe")
Priority Fee = Tip paid to miners/validators to speed up transaction execution
Components:
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Base Fee → Base network cost (fixed on Solana, dynamic on Ethereum)
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Priority Fee → Additional tip you pay to boost transaction priority
Functions:
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Increases transaction priority, getting it confirmed faster
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In MEV competition, higher priority fees increase chances of earlier execution
Summary
Your final transaction cost is jointly determined by Gas fees + Slippage (including both your configured slippage tolerance and the impact of your trade size on the pool) + MEV sandwich attacks.
Practical Example:
Many people on Solana rush into meme coin trades using 50% slippage with MEV protection enabled. Is this safe?
Most meme coins are traded via AMMs:
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You spend 1000 USDC to buy a token with 50% slippage allowed — meaning extremely unfavorable prices can still execute
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An MEV bot front-runs your buy, raising the price within your acceptable slippage range
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Your trade executes at a much higher price, resulting in fewer tokens than expected
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The bot immediately sells, profiting from your slippage loss
If MEV protection works:
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No precise sandwiching occurs (bots cannot insert transactions before and after yours)
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If pool liquidity is sufficient and your trade size doesn’t significantly impact price, execution proceeds normally
If it doesn't work:
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Solana lacks a private mempool, so MEV bots can still see your transaction and sandwich it
If your trade size impacts the pool:
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High slippage = Allows extreme price changes; inherent market volatility could lead to losses
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Low-liquidity pools = Greater price impact, increasing risk of significant losses ("landing in a box")
How to avoid being sandwiched?
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Avoid high slippage; set slippage reasonably
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When using AMMs, enable MEV protection to reduce monitoring risks
Is high slippage the key to success in meme coin trading?
Most meme coins don't experience such extreme short-term volatility that exceeding your slippage threshold improves success rate.
More important factors include your priority fee, transaction node selection, and routing path optimization — these actually improve execution success. Slippage is just one parameter for handling edge cases. In most cases, 10%–20% slippage is sufficient. During active trading, you can manually adjust slippage multiple times to manage risk effectively.
For small traders ("P xiaojiang"), who aim to leverage small capital for big gains, individual trade amounts are usually small. With proper slippage tuning, most sandwich attacks can be avoided.
Conclusion
1. When trading on an AMM (e.g., Raydium), your slippage setting directly affects your likelihood of being sandwiched by MEV bots.
2. If you set high slippage, evaluate:
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Is your gas fee high enough to deter MEV front-running?
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Is your trade amount large enough to attract MEV bot interest?
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Is the liquidity pool deep enough? Otherwise, you might hit the maximum slippage limit
3. Splitting trades into smaller batches with tighter slippage greatly reduces risks from sandwich attacks and shallow pools.
How much slippage? What defines "small" trades?
Only hands-on experience gives you the feel — just like driving a manual car, practice makes perfect!
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@haze0x
