GMGN Co-Creation Workshop: How to Become a Qualified P-Soldier

Original Title: "GMGN's Junior P Classroom - Gas, Gas Fee, Slippage, MEV"

Original Author: Haze, Co-founder of gmgn

During on-chain transactions, many fundamental concepts may determine the success or failure of your transaction.

Today, transaction tools aim to reduce everyone's operating threshold. Most people lack an understanding of on-chain parameters. In this article, we’ll help you get acquainted with them.

Some Basic Concepts:

· Gas Fee (GAS)

· Gas = Blockchain transaction fee

· Pays miners / validators to process your transaction

· High Gas → Transaction prioritization for packaging

· Low Gas → Risk of being stuck in the queue

Payment Methods:

· SOL Transaction → Pay in SOL

· ETH Transaction → Pay in ETH

· Different chains have different Gas mechanisms

Slippage:

Slippage = Deviation between the expected price and the actual execution price

Causes of Slippage:

· Insufficient market depth → Large order size, but pool liquidity is inadequate

· Transaction delay → Price fluctuation from submission to execution

· MEV Sandwich Attack → Bots manipulate prices for arbitrage

Example:

You use 1000 USDC to buy ETH, expecting to transact at 2000 USDC/ETH, which should give you 0.5 ETH.

But the execution price becomes 2050 USDC/ETH, and you end up receiving only 0.4878 ETH. Your slippage is 2.5%.

If you set your slippage to 0.1%, the transaction will fail directly due to insufficient slippage.

How does a MEV Sandwich Attack target you?

Sandwich Attack Principle:

· Front-running → Bots buy ahead of you, driving up the price

· Your trade execution → You only get filled at a higher price, suffering from slippage

· Back-running → Bots immediately sell for profit

Impact:

· Your buy price is pushed up, increasing transaction costs

· Bots exploit your slippage, making you buy high and sell low

Solana vs Eth on Sandwich Attacks

· ETH → Precise sandwich insertion

· SOL → MEV bots batch-submit orders, casting a wide net for sandwiches

How to Prevent Sandwich Attacks?

Enable MEV protection to reduce the likelihood of transaction snooping

· Priority Fee, also known as Bribe

· Priority Fee = Extra tip to miners / validators to expedite transaction

Components:

· Base Fee → Network base fee (Solana has a fixed fee, ETH has a dynamic fee)

· Priority Fee → Extra fee you pay to increase transaction priority

Purpose:

Enhance transaction packaging priority for faster on-chain execution. In MEV competition, transactions with higher priority fees are executed first.

Summary

On-chain transaction Gas Fee + Slippage (including your set slippage tolerance and the impact of your buy amount on the pool) + MEV sandwich collectively determine the final transaction cost.

Real-World Example:

Many people are apeing into dog coins on Solana with a 50% slippage + MEV protection. Is this safe?

· Most of the Sniping transactions are AMM trades

· You buy a token with 1000 USDC, 50% slippage, which allows for execution at an extreme price

· MEV bots front-run your buy, driving up the price (within your slippage tolerance)

· Your trade executes at a higher price, receiving less of the token than expected

· MEV bots immediately sell to arbitrage your slippage loss.

If MEV Protection is in place:

· Trades won't be precisely sandwiched (bots can't sandwich your transactions)

· If the pool has sufficient liquidity and the buy amount doesn't impact the price, the trade proceeds normally

If MEV Protection is not in place:

· Solana lacks a private Mempool, MEV bots can still see your transaction and sandwich you

If your amount impacts the pool:

· High slippage = permits extreme price changes, market fluctuations themselves may lead to losses

· Low liquidity pool = higher trade impact, prone to becoming a sandwich

How to Avoid being Sandwiched?

· Avoid using high slippage, set slippage range sensibly

· If using AMM, enable MEV protection to reduce monitoring risk

Is High Slippage the Key to Successful Sniping?

Most sniping transactions do not have such high short-term volatility, and the overflow slippage range does not have an additional success rate effect.

Mostly, it's your gas fee + your trading node + trade routing to pool factors. These factors can continuously improve your transaction success rate. Slippage is just an option in extreme situations. Most of the time, a 10% - 20% slippage is sufficient. This part can be manually adjusted multiple times during sniping to control risks effectively.

For junior traders, it's all about risking small to win big, with a small single purchase amount. A slight adjustment in slippage can help avoid most sandwiching situations.

Conclusion

When the trading venue is an AMM (Raydium), the slippage parameter determines your likelihood of being sandwiched by MEV.

If you set a high slippage tolerance, you need to evaluate:

· Whether the gas fee is high enough to avoid MEV frontrunning

· Whether the buy amount is large enough to make MEV frontrunning profitable

· Whether the liquidity pool is deep enough, or else you might experience maximum slippage

· By using batched small trades + reducing slippage, you can greatly reduce the risk of sandwich attacks and losses from small pools.

How much slippage is acceptable? How is a small trade defined?

This can only be felt through hands-on experience! It's like driving a manual transmission car—practice makes perfect!

Original Tweet