Have you ever witnessed any front-running case in Bitcoin? All front running cases are related to Ethereum smart contracts, auto market makers and uniswap.
Thank you
2 Answers
Have you ever witnessed any front-running case in Bitcoin?
I have not witnessed and consider there are less incentives in Bitcoin for front running, MEV etc. Although there might have been few cases in past and there are other use cases where mining involvement can extract value; e.g. miners could delay Lightning disputes
All front running cases are related to Ethereum smart contracts, auto market makers and uniswap
Front running and MEV was mentioned in https://www.paradigm.xyz/2020/08/ethereum-is-a-dark-forest/ and I will quote 2 paragraphs from it:
In the Ethereum mempool, these apex predators take the form of “arbitrage bots.” Arbitrage bots monitor pending transactions and attempt to exploit profitable opportunities created by them. No white hat knows more about these bots than Phil Daian, the smart contract researcher who, along with his colleagues, wrote the Flash Boys 2.0 paper and coined the term “miner extractable value” (MEV).
Phil once told me about a cosmic horror that he called a “generalized frontrunner.” Arbitrage bots typically look for specific types of transactions in the mempool (such a DEX trade or an oracle update) and try to frontrun them according to a predetermined algorithm. Generalized frontrunners look for any transaction that they could profitably frontrun by copying it and replacing addresses with their own. They can even execute the transaction and copy profitable internal transactions generated by its execution trace.
Difference between Bitcoin and Ethereum that increases the probability of front running in Ethereum:
| Bitcoin | Ethereum | |
|---|---|---|
| DEX | Layer 2 (Exception: Bisq although it works differently) | Mostly On-chain |
| Oracles | DLC not used by many projects yet | Used and exploited regularly |
| Unconfirmed transactions | Mempool | TxPool |
| Block size | 4,000,000 weight units (WU) | 15,000,000 gas units |
| Block Interval | Average: 10 minutes | Few seconds |
| Failed transactions | Zero | Thousands per day |
Maybe lot of other things that are different and incentivize front running.
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1Bitcoin isn't any "less vulnerable" to front running; in both systems miners have the complete authority to decide the ordering of transactions. The difference is just in how they are used - absent users who create on-chain order books (which I'd consider a dumb idea, precisely because of front running...) there obviously isn't any opportunity to change the order of those. But there are other use cases where mining involvement can extract value; e.g. miners could delay Lightning disputes. Jul 28, 2021 at 18:55
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Thanks @PieterWuille. Made changes. Rephrased few things and replaced "less vulnerable" with "less incentives".– user103136Jul 28, 2021 at 18:59
Front-running (in the case you're referring to) is a concept related to on-chain trading, where miners order transactions to affect the exchange rates of smart contracts. Since bitcoin does not currently support smart contracts, ordering of transactions cannot affect the miner, as there is nothing to front-run.
answered Jul 28, 2021 at 16:44
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2Bitcoin does not support smart contracts is incorrect.– user103136Jul 28, 2021 at 17:47
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2I agree with @Prayank's comment here, but think this answer overall is still more accurate: the reality is simply that Bitcoin simply doesn't have exchanges with on-chain order books like Ethereum has, so no money is to be made by reordering the execution of those. Jul 28, 2021 at 18:51
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on-chain bonding curves (aka trading with a liquidity pool as your counterparty) seem to be the primary target of frontrunning, moreso than order books I think Aug 4, 2021 at 21:08