What is front-running?

Placing a transaction ahead of a known pending one in order to profit from the price move it will cause.

Pending transactions on a public blockchain are visible before they are confirmed, which is what makes it possible; see mev. On a centralized platform, front-running customer orders is market abuse rather than a technical feature.

That difference is the whole story. In traditional markets this is illegal because a broker owes duties to its customer. On a public blockchain nobody owes you anything, the information is public by design, and the practice is an economic consequence of how block ordering works rather than a breach of anyone's duty.

How it works

When you submit a transaction to a public chain it enters the mempool, where anyone can read it before it is included in a block. A swap sitting there announces exactly what will be bought, in what size, and with what slippage tolerance.

A searcher reads it and submits a competing transaction paying more in priority fee, so the block builder orders it first. The classic form is the sandwich attack: buy immediately before your trade, let your buy push the price up, then sell immediately after into the price you created. Your fill is worse and the difference is the searcher's profit.

Your slippage tolerance sets the ceiling on how much can be extracted. A tolerance of 1% tells the world you will accept a price up to 1% worse, and that is precisely how much room a sandwich has to work with. Setting it high to avoid failed transactions is the most common self-inflicted version of this cost.

Defenses exist. Private transaction routes send your trade to a builder without publishing it to the public mempool. Some venues use batch auctions that give every trade in a batch the same price, which removes the ordering advantage. Splitting a large order reduces the price move each part causes.

On a centralized exchange the mechanics differ entirely. Order flow is private to the venue, so the abuse would be the venue or its staff trading ahead of customers, which is prohibited conduct rather than open competition.

Example

Illustrative arithmetic. You swap $10,000 into a token with your slippage tolerance set to 2%. A searcher sees it, buys ahead of you, and your fill lands 1.6% worse than the quote, which is $160. The searcher sells into your buy and keeps most of that after paying gas and the pool fee. Had you set tolerance to 0.3%, the extractable amount would have been capped near $30, at the cost of a higher chance the transaction reverts.

Why it matters when you buy

Buying on a decentralized venue exposes you to this, and the size of the exposure is largely a setting you control. Keep slippage tolerance as tight as the market allows, split large orders, and use a private route where one is offered. For custodial routes that avoid the mempool entirely, compare venues at the fee comparison and check depth at the liquidity pages.

Related terms

mev — the broader extraction category, sandwich attack — the common form, mempool — where pending trades are visible, slippage tolerance — the setting that caps the loss, priority fee — how ordering is bought, mev boost — the block-building market.

Questions

Can I stop my trades being front-run?

You can reduce it substantially: tighten slippage tolerance, split large orders, and submit through a private route where your venue offers one. On a public mempool you cannot eliminate it.

Does front-running happen on centralized exchanges?

Trading ahead of customer orders there is market abuse and prohibited, rather than an open activity. The public mempool version has no equivalent prohibition because the information is public.

Is all MEV front-running?

No. Arbitrage between venues and liquidations are also forms of value extraction from ordering, and they do not come at the expense of a specific pending trade the way a sandwich does.