What’s up, degens. Token airdrops are usually events that force people unfamiliar with token trading to get familiar with it, and quick. With the $BLUR airdrop happening today and everyone getting thrown in the deep end, I figured I would update my previous post on how to get started, how best to understand the space, and how not to get screwed over by a bot.
Adding the Token to Metamask:
When claiming a token like $BLUR from the airdrop, they are sent to your Metamask wallet and you will just need to add the token as viewable on Metamask.
To do this, follow these instructions:
Price Tracking the Token:
My dex of choice to track pricing is www.dextools.io. With the token contract address still copied, head to dextools and paste it into the search bar. This will assist you in finding the correct token, as there can be many tokens with the same name making it difficult to find the correct one and also creating a risk situation.
Trading the Token:
For token trading, I default to two of the main token swappers: www.uniswap.org and www.sushi.com. There are more that you can research yourself, but these are the two most popular and trusted sites for swapping tokens. Which one you use for a certain token depends on which one has more liquidity for that specific token. Crypto token trading is one of the most volatile situations in trading, as prices can swing wildly in a short amount of time. This combined with the situation of low liquidity on a token (such as a shitcoin that has just released) can result in largely different price quotes a couple seconds apart. When swapping tokens on these websites, there is one setting that you need to be very mindful of: slippage. Slippage is the maximum percent of price movement away from the quoted price you received that you are still okay with executing the transaction. If the actual price moves farther away from your quote than your maximum slippage, the trade will not be executed. Increasing this setting opens you up to getting a cost basis that is a lot worse than where the current market sits and should only be used when you truly understand the dynamics. The most common place where I have used upwards of 50%+ slippage is a hyped shitcoin that just released and has little to no liquidity. Current price may be $2, but with 50% slippage I may buy in at a price of $1.30. Generally, you’d want to turn Auto off and keep slippage under 1%. High slippage also opens you up to bot attacks like getting sandwiched, which I will outline below.
Avoiding Bot Attacks:
This was the main reason I wanted to write this article, as you can lose quite a bit of money from bots when swapping these tokens. When you submit your swap, the transaction doesn’t get picked up instantly by a block. While it waits to hop on a block, it gets entered into the mempool which is fully viewable to the public which means anyone can see what transaction you are trying to make before it gets executed. There are bots that will take this information and use it to perform an arbitrage trade at your expense. What will happen is they will see your trade and place a trade that will execute right before yours and then a trade that will execute right after yours. This will sandwich your trade between theirs, which is why it is called a sandwich attack. This kind of attack will cause you to use your full amount of slippage, executing at the worst trade price possible.
Here is an example:
- Say you want to buy 2ETH of $BLUR and let’s say that amounts to 50,000 $BLUR
- You enter your trade and it goes to the mempool
- The bot sees your transaction in the mempool and submits a transaction to buy 2ETH of $BLUR at a slightly higher gas than your transaction so their transaction goes through first
- Their transaction moves the market so that 2ETH of $BLUR is now worth 45,000 $BLUR, so your transaction goes through and you miss out on 5,000 $BLUR
- Your transaction moves the market even more, and now 2ETH is worth 40,000 $BLUR
- Right after your transaction goes through, their transaction to sell their 50,000 $BLUR goes through, which pulls in 2.25ETH for a quick .25ETH profit (which came straight from your pocket)
As you can see in this picture, the person who bought at 00: 23 :27 bought ~22,000 of this token for .22ETH. 30 seconds later, the person who bought at 00: 23 :52 bought ~20,000 of this token for .85ETH. This is because the person who bought at 00: 23 :52 got sandwiched and the bot profited .6ETH off of this person. The 2 bot transactions are marked with the red bot symbol.
This is what those attacks look like on the price graph.
So, you must be wondering how to avoid these attacks! You will have to setup something called an RPC, which is very simple and definitely worth it as seen in the previous screenshots. The premise behind using an RPC is you are utilizing flashbots to bypass the public mempool and your transaction will be sent directly to miners on these separate networks.
To use these RPCs, you will add a custom RPC to your Metamask. To use it, just switch to that RPC on Metamask when doing any sort of transaction on these swap sites, and then switch back to ETH Mainnet when finished. Easy as that, you avoid the bots!
Eden RPC Info (blocks sandwich attacks, slower transactions):
Network Name: Eden
Chain ID: 1
Currency Name: ETH
RPC URL: https://api.edennetwork.io/v1/rpc
Eden Rocket RPC Info (not 100% protected from sandwich attacks, but provides faster transactions):
Network Name: Eden Rocket
Chain ID: 1
Currency Name: ETH
RPC URL: https://api.edennetwork.io/v1/beta
Explorer URL: https://explorer.edennetwork.io/
TLDR: PLEASE SET UP AN RPC TO USE WHEN TRADING TOKENS OR YOU WILL LOSE MONEY TO BOTS.
Good luck trading and stay safe!