Transaction Reordering Attacks

Transaction reordering attacks occur when an actor, typically a validator or a sophisticated bot, manipulates the sequence of transactions within a block to profit at the expense of others. By observing the mempool, the attacker identifies a large pending order that will significantly move the asset price.

The attacker then inserts their own buy order before the victim's order and a sell order immediately after, effectively sandwiching the victim. This practice relies on the attacker's ability to influence the block construction process or pay higher gas fees to ensure priority.

These attacks undermine the neutrality of the protocol and impose a hidden tax on traders in the form of slippage. Fairness protocols aim to make the block construction process deterministic or encrypted to render these attacks impossible.