Frontrunners

Basics

• Specialized bots that 'snipe' exploitable transactions before others can finish them.
• From Bankless (8-10-2020):

"Frontrunning isn’t specific to crypto; it’s an activity as old as markets. However in Ethereum, the act of ‘frontrunning’ has never been more clear, concrete, and objective than in previous instances of markets.

It comes in all shapes and sizes, but the general pattern is that someone (usually someone more sophisticated and capable) sees someone else broadcast a transaction to the Ethereum Mempool that clearly makes them a profit.

Any rational actor who sees this is incentivized to execute this same exact transaction, but with a slightly higher gas fee. Miners will include this new transaction instead of the previous one, in order to take the extra fee the frontrunner offered. The frontrunner pockets the arbitrage, the miner receives a slightly higher fee, and the original transactor receives nothing."

• From Decrypt (25-9-2020:

"The mempool, expressively referred to as “Ethereum’s Dark Forest,” is a special “staging area” where transactions congregate before they are accepted by miners to be included in the next block. And this area is constantly patrolled by frontrunners—special bots that are looking for any exploitable transactions to hijack.

Basically, frontrunners could automatically copy any transaction in the mempool, replace its addresses with their own and make sure that the duplicate operation gets picked up by miners first."

• Samczsun, Scott Bigelow, Tina Zhen, SparkPool, and friends saved (24-9-2020) 10m in ETH from frontrunners after finding a possible exploit in Lien Finance code.
• BlockNative released (9-2020) a transaction mempool explorer.
• ZenGo analyzed generalized frontrunning attacks.
• A closeup examination of Uniswap frontrunning bots in a large transaction.
• From this blog (5-10-2020):

"In traditional decentralized exchanges (DEX’s) there is a massive problem with algorithmic traders and bots frontrunning users. Mesa is built to prevent this by creating predetermined batches of tokens. This allows users to participate in the price discovery phase without the risk of “middle-men” taking a profit because of their slow transaction speed."