Sandwich Attack Mechanisms

Sandwich Attack Mechanisms are a specific type of decentralized exchange exploitation where a trader surrounds a victim's transaction with two of their own. The first transaction buys the asset, pushing the price up, and the second transaction sells it after the victim's trade has executed at a worse price.

This strategy exploits the slippage inherent in automated market makers. By monitoring the mempool, the attacker calculates the optimal buy and sell points to maximize the price impact on the victim.

This practice is a core concern for decentralized exchange design, leading to the development of slippage protection and privacy-preserving transaction protocols. It serves as a prime example of adversarial game theory within digital asset markets.