Can a Centralized Exchange (CEX) Environment Be Exploited by a Sandwich Attack?
A true sandwich attack, as defined in DeFi, cannot occur on a CEX because CEXs do not have a public mempool and use a deterministic price-time priority matching engine. The CEX controls the order flow, preventing external bots from observing and manipulating the queue.
However, a CEX insider with privileged information could theoretically replicate the effect of a sandwich attack by front-running a large client order, though this would be classified as insider trading and market manipulation.
Glossar
Centralized Exchange
Intermediary ⎊ This refers to a regulated or semi-regulated entity that acts as a trusted third party, facilitating the custody of client assets and the matching of buy and sell orders for cryptocurrency and associated derivatives on a centralized order book.
Sandwich Attack
Attack ⎊ Sandwich Attack is a specific form of front running where an attacker executes a buy order immediately before a victim's large intended buy order and then executes a sell order immediately after, effectively sandwiching the victim's transaction between two profitable trades for the attacker.