How Do Decentralized Perpetual Futures Exchanges Address Front-Running without Commit-Reveal?
Many perpetual futures DEXs use an off-chain order book with on-chain settlement. Orders are matched quickly and privately off-chain by a centralized relayer or sequencer, hiding them from the public mempool and eliminating MEV front-running based on transaction order.
They also use oracle-based pricing and sometimes batching to ensure fair execution. This sacrifices full decentralization of the matching process for speed and MEV resistance.
Glossar
Public Mempool
Visibility ⎊ The public mempool, within cryptocurrency contexts, represents a transparent, distributed ledger of unconfirmed transactions awaiting inclusion in a blockchain.
Perpetual Futures
Structure ⎊ Perpetual Futures are a type of derivative contract, native to the cryptocurrency market, that allows traders to speculate on the future price of an underlying asset without a fixed expiration date.
Perpetual Futures Exchanges
Exchange ⎊ Perpetual futures exchanges represent a distinct category within cryptocurrency derivatives, facilitating perpetual contracts ⎊ contracts with no fixed expiration date.
Commit-Reveal
Mechanism ⎊ Commit-Reveal protocols, within decentralized finance, represent a staged disclosure of trading intentions, initially committing to a transaction and subsequently revealing the specifics.
Centralized Relayer
Mechanism ⎊ A Centralized Relayer operates as an off-chain intermediary responsible for collecting, validating, and often ordering trade intentions before submitting them to an on-chain smart contract for final settlement.
Decentralized Perpetual Futures
Mechanism ⎊ Decentralized perpetual futures represent a novel financial instrument leveraging blockchain technology to replicate the functionality of traditional perpetual futures contracts, eliminating intermediaries and enhancing transparency.