Front-Running
Executing one's own trade ahead of a known incoming order - exploiting privileged knowledge of order flow at the expense of the disadvantaged participant.
Also known asTailgatingSandwich attack (DeFi)
Definition
Front-running is the practice of trading on advance knowledge of an incoming order that is expected to move the price. Classic front-running involves a broker executing a personal trade before filling a client order; the on-chain equivalent is the sandwich attack performed by a searcher who sees a large swap in the mempool.
Variants
- Broker front-running - pre-positioning ahead of a client.
- Index front-running - trading the names entering or leaving an index ahead of the rebalance date.
- DeFi sandwich attacks - searcher places a buy before, and a sell after, a victim's slippage-tolerant swap. See MEV.
Regulatory anchor
MAR Article 12(1)(d) covers front-running explicitly; MiFID II conflict-of-interest and best-execution rules apply. In DeFi, the regulatory treatment of MEV remains an open question that ESMA has flagged as a priority for clarification under MiCA Level 3.
Detection signature
- Trader account placing a same-direction order within a short window before a client/large order, then unwinding shortly after.
- On-chain: a transaction sequence A (buy) → V (victim) → A (sell) executed in the same block.