How Do High Gas Fees Facilitate Front-Running in a Proof-of-Work or Proof-of-Stake System?
High gas fees facilitate front-running because block producers typically prioritize transactions that offer the highest fees, maximizing their profit. Front-running bots exploit this by observing a profitable transaction in the mempool and submitting their own order with a significantly higher gas fee (a "priority fee" or "tip").
This ensures their transaction is included in the block before the target transaction, allowing them to capture the arbitrage opportunity.
Glossar
Gas Fees
Mechanism ⎊ Gas fees represent the computational cost required to execute transactions or smart contracts on a blockchain network, particularly Ethereum and its Layer-2 solutions, functioning as a deterrent against denial-of-service attacks and a reward for network validators.
High Gas Fees
Cost ⎊ The prevalence of elevated transaction fees, commonly termed "high gas fees," within blockchain networks, particularly Ethereum, represents a significant impediment to efficient market operation.