Flash Boys 2: Frontrunning, transaction reordering, consensus instability (2019)
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Re: Flash Boys 2: Frontrunning, transaction reordering, consensus instability (2019)
#2HFT firms are re-applying a lot of techniques that worked a decade or more ago in regular markets, except now there's way less competition and way less regulation. They are making a killing right now in crypto.
Re: Flash Boys 2: Frontrunning, transaction reordering, consensus instability (2019)
#3[deleted]
Re: Flash Boys 2: Frontrunning, transaction reordering, consensus instability (2019)
#4Couple things.
(1) The word "frontrunning" applies only in a very specific context, where you trade in front of an entity with which you have a client relationship. That is different from capturing a trading opportunity because you are faster than another party. Frontrunning is illegal and law-abiding HFT firms don't do it. They often don't even have clients to which this applies! Being faster is not illegal. Can we please stop using this term to describe behavior we don't like.
(2) What do they mean they introduce the term MEV (miner extractable value)? Everyone calls it that, and it's part of the incentive that miners have to validate transactions.
(3) Might want to add (2019) to the title, this paper is pretty old. Perhaps this answers (2).
Re: Flash Boys 2: Frontrunning, transaction reordering, consensus instability (2019)
#5Couple things. (1) The word "frontrunning" applies only in a very specific context, where you trade in front of an entity with which you have a client relationship. That is different from capturing a trading opportunity because you are faster than another party. Frontrunning is illegal and law-abiding HFT firms don't do it. They often don't even have clients to which this applies! Being faster is not illegal. Can we…
Everyone calls it MEV because of this very paper. They coined the term. You did answer your own question in (3).
Re: Flash Boys 2: Frontrunning, transaction reordering, consensus instability (2019)
#6Couple things. (1) The word "frontrunning" applies only in a very specific context, where you trade in front of an entity with which you have a client relationship. That is different from capturing a trading opportunity because you are faster than another party. Frontrunning is illegal and law-abiding HFT firms don't do it. They often don't even have clients to which this applies! Being faster is not illegal. Can we…
Everyone calls it MEV because of this very paper. They coined the term. You did answer your own question in (3).
Yep, that one is my bad. That's why I added the edit.
Re: Flash Boys 2: Frontrunning, transaction reordering, consensus instability (2019)
#7Couple things. (1) The word "frontrunning" applies only in a very specific context, where you trade in front of an entity with which you have a client relationship. That is different from capturing a trading opportunity because you are faster than another party. Frontrunning is illegal and law-abiding HFT firms don't do it. They often don't even have clients to which this applies! Being faster is not illegal. Can we…
[deleted]
Re: Flash Boys 2: Frontrunning, transaction reordering, consensus instability (2019)
#8Earlier quoted context omitted.
Everyone calls it MEV because of this very paper. They coined the term. You did answer your own question in (3).
Yep, that one is my bad. That's why I added the edit.
I think (1) is a bit harsh relating to the terminology. Technically front running is based on plainly “non-public” information. The term has been generalised and expanded to include crypto transactions which are slightly more obfuscated from the average user who doesn’t sit and watch the mempool. I think the term is completely appropriate.
Re: Flash Boys 2: Frontrunning, transaction reordering, consensus instability (2019)
#9Earlier quoted context omitted.
Yep, that one is my bad. That's why I added the edit.
I think (1) is a bit harsh relating to the terminology. Technically front running is based on plainly “non-public” information. The term has been generalised and expanded to include crypto transactions which are slightly more obfuscated from the average user who doesn’t sit and watch the mempool. I think the term is completely appropriate.
I respectfully don't think it is too harsh. Every legal definition I know of frontrunning requires a client relationship. Even in the case of "non-public" information, frontrunning refers to trading ahead of your client based on non-public information related to the clients securities. Trading on non-public information when a client is not involved is referred to as insider trading.
Also in this context, the reason that these sandwich attacks can happen is because all the information is public. The adversary can see your transaction waiting to be validated, and pay the miner a higher gas fee to be executed first.
Re: Flash Boys 2: Frontrunning, transaction reordering, consensus instability (2019)
#10HFT firms are re-applying a lot of techniques that worked a decade or more ago in regular markets, except now there's way less competition and way less regulation. They are making a killing right now in crypto.
> They are making a killing right now in crypto.
HFT bonuses (many HFT firms trade crypto now) have been crazy since 2020. Even infra SWEs are making 7 figures of TC.