What Are the Differences between Front-Running in Traditional Finance and on DEXs?
In traditional finance (TradFi), front-running is illegal and typically involves a broker using privileged information about a client's pending order to trade for their own benefit. On Decentralized Exchanges (DEXs), front-running is often permissible and is based on public information from the mempool, not private client data.
The TradFi version relies on a breach of fiduciary duty, while the DEX version is a technological race based on transaction fees and speed, viewable by anyone.
Glossar
Traditional Finance
Comparison ⎊ Traditional Finance refers to the established, regulated global system of financial intermediation, including centralized exchanges, custodians, and clearinghouses, which provides the conceptual and structural backdrop against which novel crypto derivatives markets are often compared.
Transaction Fees
Cost ⎊ Transaction fees represent a quantifiable expense incurred for processing and validating transactions across diverse financial systems, functioning as a critical component of network participation and security.
Decentralized Exchanges
Access ⎊ These platforms offer permissionless entry to cryptocurrency and tokenized asset markets, democratizing capital deployment into novel financial structures.