Transaction Sequencing Bias

Transaction sequencing bias occurs when the order of transactions in a block is manipulated to favor certain actors, often at the expense of others. In decentralized exchanges and derivative protocols, the order in which trades are processed can determine the price received and the success of a transaction.

If a validator or a sophisticated bot can influence this sequence, they can extract value through front-running or sandwiching. This bias undermines the fairness of the market and can lead to increased costs for regular users.

Protocols are increasingly looking for ways to randomize sequencing or use fair-ordering services to ensure that transactions are processed in a transparent and equitable manner.