How Do Batch Auctions Eliminate the Transaction Ordering Advantage?
Batch auctions eliminate the transaction ordering advantage by collecting all orders submitted within a specific time interval (the batch window) and executing them all simultaneously at a single, uniform clearing price. Since all orders within the batch are treated equally and execute at the same price, there is no "first" or "last" order, and therefore no opportunity for a front-runner to profit by reordering transactions or placing their own trade before or after a victim's.
Glossar
Transaction Ordering
Sequencing ⎊ Transaction ordering within cryptocurrency, options, and derivatives markets establishes the chronological execution of trades, critical for maintaining systemic integrity and preventing manipulation.
Batch Auctions
Mechanism ⎊ Batch auctions, within cryptocurrency and derivatives markets, represent a simultaneous order submission and execution process, differing fundamentally from traditional continuous limit order books.
Transaction Ordering Advantage
Execution ⎊ Transaction Ordering Advantage, within cryptocurrency and derivatives markets, represents the preferential treatment afforded to certain orders based on their arrival sequence and network conditions.