What Is the Primary Difference in Front-Running Mitigation between Centralized (CEX) and Decentralized (DEX) Exchanges? ⎊ Path

What Is the Primary Difference in Front-Running Mitigation between Centralized (CEX) and Decentralized (DEX) Exchanges?

CEXs prevent front-running through centralized control, regulatory compliance, and internal trade surveillance systems. They manage the order book and transaction execution sequence privately, making traditional front-running by external actors impossible.

DEXs, however, operate on public blockchains where pending transactions are visible in the mempool. Mitigation on DEXs is therefore technical and protocol-based, involving solutions like private transaction pools, transaction batching, and fair sequencing to counteract the transparency of the public ledger.

The core difference is centralized governance versus decentralized protocol design.

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What Is the Difference between Front-Running on a CEX versus a DEX?

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Why Is Transaction Ordering a Greater Challenge for Front-Running on a DEX than a CEX?

How Do CEXs Typically Use Trade Surveillance to Detect Front-Running?

Glossar

Traditional Front-Running

Exploit ⎊ Traditional Front-Running is the illegal practice where a broker or intermediary, possessing non-public knowledge of a large client order, executes a trade for their own account ahead of the client's order.

Internal Trade Surveillance

Mandate ⎊ Internal Trade Surveillance represents the mandatory compliance function within financial institutions and centralized crypto exchanges responsible for monitoring all proprietary and client trading activity.