Sandwich Attacks in Crypto
Sandwich attacks are a form of market manipulation targeting users on decentralized exchanges, exploiting price movements to profit from a victim's trade. In these attacks, an attacker places two orders around a victim's trade—buying before and selling immediately after—thereby profiting from the price change induced by the victim's large order. This type of market manipulation negatively impacts crypto traders by eroding trust, reducing profits, and undermining fairness in decentralized exchanges. Solutions like private transactions and MEV boosts are being explored to mitigate these issues. The mechanics of a sandwich attack involve monitoring the mempool for large trades to place strategically timed buy and sell orders. Techniques to prevent such attacks include using slippage tolerance settings wisely, executing smaller trades, and employing private transaction services. Additionally, MEV encompasses other strategies like liquidation arbitrage and NFT-specific exploits, highlighting a range of market inefficiencies that can be manipulated. It is essential for traders to remain vigilant to safeguard their interests in the evolving crypto landscape.
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