Front-Running

Front-running exploits the transparent nature of blockchain mempools. When you submit a large swap on a DEX, the transaction sits in the mempool waiting for block inclusion. MEV bots constantly scan the mempool and, upon detecting your trade, submit an identical buy order with higher gas to execute before yours. Your trade then executes at a worse price (because the bot's buy already moved the market), and the bot sells into your inflated price for a profit.

In traditional finance, front-running is illegal — brokers who trade ahead of client orders face prison time. In crypto's permissionless environment, it exists in a legal gray area. The practice is technically just transaction ordering optimization, but it extracts value from ordinary users. According to Flashbots data, MEV extraction (including front-running) has generated over $600 million in extracted value on Ethereum since January 2020, with front-running and sandwich attacks being the primary techniques.

Mitigation strategies exist but are imperfect. Private transaction pools (Flashbots Protect, MEV Blocker) send transactions directly to block builders rather than the public mempool, hiding them from front-runners. DEX aggregators like 1inch and CowSwap use order flow auctions and batch settlements to reduce front-running exposure. Setting tight slippage tolerances helps — if a front-runner can't move your price beyond your slippage setting, the attack isn't profitable. Some L2 rollups have sequencer designs that inherently prevent mempool-based front-running.