Brainstorm: Mitigation of Front-Running

CHIPs
1

Front-Running / Trading Order-Flow / Sandwich Trading, is a rational market behavior. Negative characterization of such rational market participants is irrelevant. Usually, the “Adversary” has greater knowledge or analysis of the Order Book, a better order strategy, or a faster effective execution.

I would reframe this challenge as the modeling and specification of acceptable slippage, by all participants, as fairly as can be achieved practically.

The “Hero” trader of concern, can either trust a DEx to predict/model and manage acceptable slippage (for a fee), or … Chia Inc could modify the capabilities of Offers to specify acceptable slippage in a best-price-first (Best Execution) Context. The traditional markets allow our Hero to use “Limit Orders” to control slippage.

Disclaimer: I am not familiar with possible technical-blocking issues, for this or similar suggestions.

I :green_heart: Chia.

2

Another way to reduce slippage for very large orders, would be for the DEx to implement strategies allowing a longer time period for settlement.

For example, Dexie Auto-Combined Offers could be extended, such that you may ask for the accumulation or distribution to be spread over a few hours.

In the traditional markets, brokers offer such trading strategies as detailed on the Interactive Brokers website:

I have no affiliation with Interactive Brokers.

3

A lot of the MEV that exists on Ethereum is mitigated on Chia because all transactions are executed simultaneously in a Chia block. Of course, price slippage is still possible from block to block. If you are interested in refining the Offers process with Chialisp, you can always create a CHIP.