What Is Front-Running in the Context of Decentralized Exchanges?
Front-running on decentralized exchanges (DEXs) occurs when an attacker observes a profitable transaction pending in the public mempool. The attacker then copies this transaction but submits their own with a higher transaction fee (gas).
This incentivizes network validators to process the attacker's transaction first. The attacker profits from the price movement caused by the victim's original, now-delayed transaction.
This is a common form of Maximal Extractable Value (MEV).
Glossar
Maximal Extractable Value
Concept ⎊ Maximal Extractable Value, or MEV, refers to the profit that miners or validators can extract by strategically reordering, censoring, or inserting transactions within a block.
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.
Decentralized Exchanges
Access ⎊ These platforms offer permissionless entry to cryptocurrency and tokenized asset markets, democratizing capital deployment into novel financial structures.