Sandwich Trading Mechanics

Sandwich Trading Mechanics involve a predatory strategy where a trader monitors the mempool for large pending transactions to execute their own trades around them. The attacker places a buy order immediately before the victim's trade, causing the asset price to increase, and then places a sell order immediately after, effectively sandwiching the victim between two transactions.

This forces the victim to trade at a worse price, with the attacker capturing the difference as profit. In decentralized exchanges, this is a form of front-running that exploits the visible nature of pending transactions on public blockchains.

It is a classic example of market microstructure manipulation where information asymmetry is leveraged for financial gain. Protocols often attempt to mitigate this through transaction sequencing or privacy-preserving techniques.