Crypto insiders believe there are about 1,000 bots in action on Ethereum. But likely only 10 groups of sophisticated traders make the bulk of the profits, says Nathan Worsley, who believes he’s one of those traders. Worsley has an econometrics degree from the University of Queensland, worked at a small hedge fund in Hong Kong, and started two crypto exchanges before becoming what’s known as a “searcher,” or bot operator. Besides front-running known trades, searchers also can make money just by finding profitable opportunities faster than others. Worsley says that for ethical reasons he doesn’t front-run.
Worsley has run and created about 50 bots, often with help from other people with whom he splits profits. He currently has nine bots running, sending transactions every 10 seconds on average. “It is an industry that’s fairly anonymous,” says Worsley, who’s one of the only searchers to use his real name. “I have pretty close relationships with people represented by anime characters.”
Successful searchers, like high-frequency traders, work hard to reduce the time it takes for their orders to travel down the wires, so they can beat rivals to an order. Worsley pays about $20,000 or more a month to cloud services to use their servers, and he specifically looks for those in locations close to specific Ethereum miners or relays. “The rise of Flashbots created more competition. A lot more people came in,” says Worsley, noting that trading is getting less profitable. He tweaks his bots daily, looking at data from Flashbots auctions. “On some level it’s a little bit like a chess game or a poker game. It’s definitely not an easy thing to do.”