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What Is the Risk of ‘Front-Running’ in Derivative Smart Contracts?

Front-running occurs when a malicious actor sees a pending transaction (like a large trade or liquidation) in the public blockchain memory pool (mempool) and submits their own transaction with a higher gas fee. This allows their transaction to be processed first, profiting from the predictable price movement or action of the original transaction.

What Are the Differences between Front-Running in Traditional Finance and on DEXs?
How Does Front-Running Relate to MEV and Fair Transaction Ordering?
Can a Transaction with a Low Gas Fee Still Be Front-Run?
Define ‘Front-Running’ and How It Exploits Low Finality in Trading