Front-Running and MEV

Front-running is a practice where an entity observes a pending transaction and executes their own transaction before it, in order to profit from the expected price change. In blockchain, this is a key component of Miner Extractable Value, or MEV.

MEV is the profit that validators or miners can extract from the reordering, inclusion, or exclusion of transactions within a block. While some forms of MEV can be beneficial, such as arbitrage that helps keep prices consistent, predatory MEV, like front-running and sandwich attacks, harms regular users by increasing their costs and slippage.

These practices are a direct consequence of the transparency of the mempool and the incentive structure of consensus mechanisms. Mitigating harmful MEV is a major challenge for protocol developers.