Front-Running
Front-running in the context of decentralized finance occurs when an entity, such as a validator or a bot, observes a pending transaction in the public mempool and submits their own transaction with a higher gas fee to ensure it is processed first. By doing so, the attacker can manipulate the price of an asset to their advantage before the original transaction is executed.
This is a form of predatory behavior that extracts value from unsuspecting users, often referred to as miner extractable value or maximum extractable value. It exploits the transparency of public blockchains where all transactions are visible before they are finalized.
Traders mitigate this risk by using private transaction relays or adjusting their slippage tolerance. This phenomenon highlights the tension between public blockchain transparency and fair market execution.
It remains a significant challenge for protocol designers seeking to minimize information asymmetry.