The good, the bad, and the ugly. VXL is a token with no tax.
07 Nov 2022, 18:53
BOTS! The good, the bad, and the ugly!
Tl;dr
VXL is a token with no tax.
This means when you buy VXL from Shibaswap or Uniswap, you can safely set the slippage as low as 0.1%. As long as no other buyer purchases at the exact same time, and pays more gas than you, your purchase will succeed. 👍
Great! Now that we got that out of the way, let's talk about bots, why they're annoying, and how to avoid them.
As the saying goes, you have good bots, bad bots, and human bots.
Good bots, or contracts are the ones developed by for example 1inch. Their contracts are trying to look for arbitrage opportunities between, in our case, Shibaswap, and Uniswap, to help the customer get the most tokens for their ETH. Excluding gas for simplicity, the way this works is that their platform looks for the best price possible for your ETH. This means if VXL is priced 3% lower on Shibaswap than Uniswap, their smart contracts make sure to put higher pressure on Shibaswap than Uniswap, so when your purchase is done, the price between the two are equal, and you are left with more tokens than if you purchased only on Uniswap.
Bad bots, or sandwich bots as they're also called, try to get between you and your slippage. Lets take a look at how they work and how we can ensure that all our ETH goes to purchasing the token, rather than feeding the bot.
The way a sandwich bot works, is that when you confirm your transaction, that transaction is placed in a pool where it waits for miners to confirm it. At the same time, bots are constantly scanning these pools, looking for a little snack. If they find something they like, they purchase with a higher gas than you, which raises the price before your buy. Then they immediately sell in the same block!! Now that's some impressive coding!
So how to avoid these evil bots, you ask?
SLIPPAGE! Yes, that's right. Bad, ugly sandwich bots feed off slippage alone. So when purchasing high quality tokens, with no tax, like VXL, the only thing you need to do to avoid getting sandwiched by a bad bot is to set your slippage as low as possible. As long as no one tries to purchase at the exact same time and with more gas than you, your purchase will succeed with slippage as low as 0.1%!
So what is slippage? It is the premium YOU are willing to pay to secure your tokens in that transaction. Example: If you want to buy 1000 tokens for 1 ETH, and set slippage to 10%, you're saying that as long as you get 900-1000 tokens for your 1 ETH, you're happy. So if a sandwich bot sees this, it can purchase the token, raising value 10%. Then your buy executes and raises the price further, and the bot sells with profit. This is simplified, but in essence, what happens.
So, to sum up: Use low slippage, high gas.👍