Can Layer 2 Scaling Solutions Inherently Reduce the Opportunity for MEV Front-Running?
Yes, Layer 2 (L2) solutions, particularly rollups, can reduce MEV front-running opportunities. L2s often use a sequencer to batch and order transactions before submitting them to Layer 1.
If the sequencer implements a fair ordering policy (e.g. strict first-in, first-out) and keeps the pending transaction pool private, it can mitigate front-running. The lower transaction costs and higher throughput on L2s also reduce the profit margin for gas-fee-based front-running.
Glossar
Lower Transaction Costs
Efficiency ⎊ Lower transaction costs within cryptocurrency, options, and derivatives markets represent a reduction in the expenses associated with executing trades and managing positions, directly impacting profitability and capital allocation.
Layer 2 Scaling Solutions
Definition ⎊ Layer 2 scaling solutions are secondary protocols built on top of a base blockchain, or Layer 1, designed to enhance transaction throughput and reduce costs.