MEV Sandwich Attacks

MEV sandwich attacks occur when a malicious actor identifies a pending transaction in the public mempool and places their own transactions before and after it to profit from the resulting price shift. This predatory behavior exploits the transparent nature of blockchain transaction ordering.

The attacker buys the asset before the victim's trade to drive the price up, and then sells it immediately after the victim's trade executes at the higher price. This process effectively steals value from the user by artificially increasing their slippage.

It is a significant challenge in decentralized finance, particularly for traders who do not use private transaction relays. The phenomenon highlights the complexities of protocol physics and the need for robust mempool management.

Understanding these attacks is vital for traders seeking to minimize execution costs in decentralized environments.