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Sniper - Is it easy to “feed” on hustle trading?
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- @airdropdecks
From fierce competition, high trading fees to unpredictable market volatility, is “sniping” really as good a piece of cake as the rumor goes?
A trader has just experienced the bitter journey of becoming a Sniper in the Ordinal market with the hope of changing his life. This experience, rather than being filled with roses as he imagined, was a valuable lesson in the ferocity of the crypto market.
About the concept of ordinals and “RBF sniping”
Ordinal is a form of NFT issued on the Bitcoin blockchain, allowing users to “etch” digital content onto satoshi — the smallest unit of Bitcoin. The emergence of ordinals has opened up a potential new market, capturing the attention of investors and bringing with it tricks to gain an advantage. One of them is “RBF sniping”.
“RBF sniping” is the technique that allows users to “intersect” to buy ordinals before others. When a Bitcoin transaction is pending in the mempool, snipers pay a higher transaction fee so that their trade is prioritized, thereby winning the Ordinal of the person who placed the buy order previously.
Some snipers will create their own bots or scripts to automate this process. Those who do not have the ability to write code to create their own bots often use platforms such as Magisat, which supports snipe tools and allows customization of fees to optimize snipe efficiency.
Although this technique is not stealing, since snipers still pay to buy Ordinals, it is considered by many to be unfair. However, some such as Quary, who runs the Magisat exchange, argue that RBF is a valid function of Bitcoin and that competing transaction fees is an inevitable part of this network.
Yohan Yun's Thorny Sniping Journey
After being guided by Quary and funded 0.05 BTC, Yohan Yun begins his journey to become a sniper. Yohan promised to do charity if he made a profit, and to return the money to Quary if he lost.
At first, Yohan was excited, believing that sniping NFTs would be easy to make a profit. He imagines he will quickly earn a pittance from buying cheap and expensive Ordals.
However, the reality is not as simple as Yohan thought. The market NFT, especially Ordinal, volatility is very strong and the value of NFTs can skyrocket or plunge in the blink of an eye. This makes pricing and surfing extremely difficult, even for seasoned snipers.
Transaction fees are an important factor affecting profitability in RBF trading. Each time the snipe function is used, the user will compete with other snipers in terms of transaction fees. Sometimes the fact that snipers compete with each other causes the amount of fees to be paid unexpectedly high and the percentage of profit decreases.
According to Yohan Yun, he once spent nearly 0.033 BTC to snipe a Bitcoin Frog NFT but then couldn't resell it at a higher price, making his snipe a loss-making trade.
It is advisable to focus on those collections that are highly liquid, as they can be resold immediately without having to worry about price fluctuations. Make a profit from sniping, then re-list at a slightly higher price to reap the profits.
On another occasion, Yohan successfully sniped a Fractal Puppet for 0.00175 BTC but soon the floor price of this collection plummeted, leaving him unable to find a buyer despite several price reductions.
Due to his lack of experience and not yet grasping the market, Yohan regularly buys illiquid NFTs, which are difficult to resell, resulting in a hugging situation and having to accept stop-loss. The amount of Bitcoins that Quary funded Yohan kept dwindling with each transaction.
Through this, Yohan realized that “crowding” to buy NFTs does not mean securing profits. If you are not careful, users using the snipe method can easily fall into the trap of “buying socks, selling them off”, even losing white.
After several attempts, Yohan almost lost the entire amount funded by Quary, leaving only 0.017 BTC and 2 illiquid NFTs. However, luck smiled on Yohan when one of his 2 NFTs again successfully sold for 0.03 BTC, thereby taking back part of the initial capital.
How do skilled “RBF gunners” make a profit?
In the competitive world of sniping, even snipers can become targets of other snipers. Yohan Yun experienced the bitter feeling of being robbed of a transaction right before his eyes.
Yohan recounted that during one RBF transaction, when he switched to another browser tab and then returned, he found that his transaction had been replaced by another sniper.
Yohan noticed that even when offering a much higher fee than the pending transaction in the mempool, he was frequently robbed of trades. This shows the fierce competition and sophisticated skills of skilled snipers.
Quary also shared that good snipers not only pay higher fees, but also have a clear strategy. Quary takes the example of one time he discovered that a seller accidentally listed Bitcoin Frog NFTs for 0.04 BTC instead of 0.4 BTC.
Immediately, a sniping bot tried to buy it, but Quary got involved in the transaction fee war and eventually won these Ordals for about $3,700, plus $1,300 in fees. He later resold it for $17,000.
Once you have hit the 'Sell' button, there is nothing you can do if you type the wrong price. Bot and sniper will immediately jump in.
“Sniper” ruins the game of Ordals and Runes on Bitcoin
Although ordinals and BRC-20, forms of NFTs on the Bitcoin platform, are dominating the NFT market with the highest annual trading volume (as of mid-December 2024), reaching $3 billion compared to the $2.8 billion of NFTs on Ethereum, again sniping is having negative effects on user experience and trading strategies.
Magic Eden, the preferred exchange for Bitcoin assets, has become a hot spot of sniping activity.
Sniping operations take place continuously without ceasing. This not only annoys users, but also causes the transaction fees to be wasted on miners, harming the entire market.
In addition, the sniper also affects the Sweeping strategy, a common strategy that traders use to buy large amounts of NFTs from a specific collection. Sweeping removes the cheapest NFTs from the market, pushing the collection's floor price high and bringing huge returns to buyers.
A lot of our users like to 'scan the floor'. But if I wanted to 'scan' 20 NFTs in the mempool and a sniper offered a higher fee for even just one NFT, the whole 'floor' plan would be broken.
In response to the sniper, Magic Eden has rolled out a new update that only allows pre-approved people to purchase NFTs, much like making a guest list for an auction.
This update uses Merkle Tree technology - a way of encrypting information for security. In addition, instead of processing all transactions at the same time, Magic Eden breaks down into three small transactions.
The first two transactions transfer NFTs to a secure “safe” and the buyer pays the seller. The new final transaction allows the buyer to grab the NFT, while also activating the previous two, making it impossible for the sniper to steal.
Put aside the dream of “sniper”, accept losses
After an unsuccessful attempt as a “sniper”, Yohan Yun gave up when Magic Eden stopped the operation on their floor. However, Yohan realized that snipers could still continue to operate on other exchanges.
According to data from Dune Analytics, on December 9, OKX recorded 3,275 Ordinal transactions, which is almost equal to the 3,333 transactions on Magic Eden.
There will always be people looking to steal NFTs because not every exchange wants to interfere with the buying and selling process.
Yohan accepts failure and sees this as a valuable lesson. The remaining 0.01 BTC from Quary's initial investment was donated by him to the Open Ordinal Institute, a non-profit organization that helps develop ordinals on Bitcoin.
Yohan retained the NFT Fractal Puppet 75682950 as a memory of the windy days of being a “sniper”. The value of this NFT has now plummeted, leaving just 0.000049 BTC on Magic Eden. Yohan sadly admits that he will probably have to hold this NFT until it is no longer worth it.
Yohan's story shows that stealing NFTs is not a quick and easy way to get rich. It requires knowledge, skills, agility and high risk tolerance. Sometimes, accepting losses and drawing lessons from experience is a wise decision.
