All you need to know about front-running in crypto trading

Asia's Tech News Daily

#blockchain, #blockchain solution, #blockchain technology, #ethereum blockhain, #Ethereum network

Back in the day, when trading on the stock exchanges was a chaotic affair, with transactions taking place between pieces of paper and hoarse screams, a particular intra-day trading tactic, namely “front-running” was extremely popular.

Here’s what happened. The person in question waited and watched, with bated breath, as a major trade, like someone purchasing a huge amount of shares was being executed. 

On the back of this prior information and non-publicly accessible data that gave them an edge over others, the individual would slip ahead of other traders and race to the front at the very last minute, having figured out how to book massive profits. 

And you’d think that it would not be an issue in today’s time of decentralized finance, but that’s far from true. You see, traders have the option to keep a close eye on the mempool on the decentralized exchange (DEX), which is essentially a platform where all valid transactions are listed and publicly available, awaiting confirmation by the Bitcoin network. A high mempool size is indicative of longer confirmation time, higher priority fee, and greater network congestion. 

Thus, everyone on the network can know well in advance if there is a major, substantial trade is coming up. 

At this point, the front-runners broadcast their own exchange and using automated bots, attempt to push their transactions further from the aforementioned exchange by bidding a higher gas price so that a miner will prioritize the inclusion of their transaction, hence benefitting at their expense. 

“Front running on DeFi is becoming even more complex and frankly depressing,” said Douglas Horn, Telos chief architect, and whitepaper author. “It started with individuals using bots to offer high gas fees to jump the line in front of high-value transactions.”

Rampantly used by ethereum miners and trader bots, front running has fundamentally and unfortunately,  evolved into multi-billion-dollar ethical malpractice of entering into an equity trade, option, futures contract, derivative, or security-based swap to capitalize on advance, non-public knowledge of a large pending transaction that will influence the price of the underlying security or coin. 

He continued “As time progressed, the miners themselves inserted their own front-running transactions while paying only the minimum gas fees (gas fees are shared with the many mining nodes working for a mining pool whereas front-running fees can be kept by the pool operators). With this, the mining pools operating the chain are extracting this value from users without their consent.”

To present an effective counter to this malice and to comprehensively insulate institutional and large-scale traders from front runners, Telos has come up with a non-Ethereum fork, EVM (Ethereum Virtual Machine) that is capable of running existing Solidity and Vyper contracts without modification, just like Ethereum, with the added advantage of 30X greater speed, greater than 100X higher capacity, around 1 percent of the cost of Ethereum gas fees, transaction fees that allows for even sub-dollar transactions and around 31mm times less energy consumption per transaction. 

“Ethereum 2.0 did not ease the front-running concerns for institutional investors to go big into crypto investments. Miners keep skipping the line and increasing their spread and de facto stealing millions of dollars. Telos EVM is faster, better, cheaper, and functions on a first-come, first-serve basis. The simplicity of integrating with Metamask allows investors to trade as safely as they are used to on NASDAQ”, elaborated Horn. 

Internet Explorer Channel Network
Asia's Tech News Daily
News Related

OTHER NEWS

Taking Stock | Sensex down 196 points, Nifty below 17,000; consumer durables and FMCG gain

Sensex | Representative image Indian equity benchmarks ended lower amid volatility on November 30 as concerns over the Omicron variant of the coronavirus weighed on the market even as IT and healthcare ... Read more »

Maruti Suzuki hikes prices of Eeco van by Rs 8,000

Maruti Suzuki Eeco Maruti Suzuki India on Tuesday said it has increased prices of all non-cargo variants of its Eeco van by Rs 8,000 owing to the introduction of passenger ... Read more »

UK regulator orders Facebook to sell Giphy

Source: Reuters A British regulator on Tuesday ordered Facebook to sell Giphy, assessing that its acquisition of the animated graphics startup would hit competition and advertising. The Competition and Markets ... Read more »

Explainer| Why Kerala is upset with the RBI on regulation of cooperative banks

Kerala Legislative Assembly On November 22, the Reserve Bank of India (RBI) issued a circular that warned cooperative societies about using the word ‘bank’ in their names and accepting deposits from ... Read more »

Eight core industries growth rises by 7.5% in October

Representational image The combined output of eight core industries has surged by 7.5 percent in October, as compared to the same period last year, showed the official data released on November ... Read more »

'I can't even afford to buy a cart of groceries': Spiraling inflation leaves some grocery workers struggling

The gap between hourly wages and the cost of food means many grocery workers often face the daily experience of being around food they can’t afford. Read more »

Omicron already playing havoc with travel and tourism

The latest Covid-19 variant has introduced new concerns and restrictions into travel plans. Read more »

Barbados bids farewell to British monarchy, becomes republic

The Associated PressBarbados’ new President Sandra Mason, center right, awards Prince Charles with the Order of Freedom of Barbados during the presidential inauguration ceremony in Bridgetown, Barbados on Tuesday Nov. ... Read more »

Inflation fears and corona concerns are pushing stock markets into the red

European stocks plunged into the red again on Tuesday after the rebound a day earlier. Concerns about soaring inflation in the eurozone and fears that existing vaccines will not work ... Read more »

Goldman downgrades Dollar Tree to neutral, says company's improvements are priced in

People walk past a Dollar Tree store on November 23, 2021 in Los Angeles, California.Mario Tama | Getty Images Shares of Dollar Tree are getting too expensive and investors should ... Read more »

Kremlin hopes there will be no threats to completion of Nord Stream 2 certification

Dmitry Peskov emphasized that the certification and launch of Nord Stream 2 are in the interests of all European consumers Read more »

Reuben property billionaires plot £180m deal to fund Admiralty Arch hotel project

The Reuben family is on the verge of a £180m deal with Prime Investors Capital that would see it become a significant shareholder in the redeveloped Admiralty Arch site, Sky News learns. Read more »

Eight core industries growth rises to 7.5% in October

The growth of eight core industries has surged by 7.5 percent in October 2021 as compared to the same period last year, showed the official data released on November 30. ... Read more »

Go Fashion shares close 81% higher on debut despite market volatility

Go Fashion India IPO Shares of Go Fashion, the operator of Go Colors brand, remained strong throughout the session, and closed 81.5 percent higher on the day of the stock’s debut amid ... Read more »

Credit growth to industry picked up in October, shows RBI data

Representational image. Credit growth to industry picked up to 4.1 percent in October 2021 from a contraction of 0.7 percent in October 2020, according to the latest data from the ... Read more »

What is known about new Twitter boss Parag Agrawal?

Read more »

Volvo Cars built 50,000 fewer cars due to chip shortage

Photo: ANP Swedish car maker Volvo Cars has built 50,000 fewer cars in the third quarter compared to a year earlier due to chip shortages that have plagued the global ... Read more »

STI falls 2.5% in single largest decline in a year amid Omicron variant fears

Decliners outnumbered advancers 338 to 172, with 3.22 billion shares worth S$3.89 billion changing hands. SINGAPORE (THE BUSINESS TIMES) – The Straits Times Index (STI) saw its largest single-day decline ... Read more »

Inflation in 19 nations using euro hits record high of 4.9%

The Associated PressFILE – People fill up the shopping streets in Cologne, Germany, Wednesday, Nov. 17, 2021. Official figures show that consumer prices across the 19 countries that use the ... Read more »

Zee-Invesco court war: Division bench adjourns hearing, no date given so far

ZEEL | Representative image The division bench of the Bombay High Court headed by Justice SJ Kathawalla and Milind Jadhav adjourned the hearing on the Zee Entertainment and Invesco matter ... Read more »

Centre's April-October fiscal deficit at 36.3% of Budget estimates for FY22

(Representative Image) The Centre’s fiscal deficit during April to October, that is the first seven months of the year, is well below last year’s at Rs 20,200 crore as against ... Read more »

Buy IndusInd Bank: target of Rs 1340: Sharekhan

Sharekhan’s research report on IndusInd Bank IndusInd Bank’s promoters may look forward to increase its stake to 26% from currently at 16.54% (as September 2021). The bank continued its Digital ... Read more »

How DHL is navigating supply chain challenges

Read more »

‘I'm concerned but I'm not panicking,' says NYU epidemiologist on the omicron variant

Dr. Celine Gounder, epidemiologist and professor at NYU, urged Americans to get vaccinated and boosted as the best way protect themselves until it becomes clear how well the current Covid ... Read more »

Dutch inflation rate rises to 5.6%, well above eurozone average

Photo: Depositphotos.com The Dutch rate of inflation has risen again to 5.6%, according to new figures published on Tuesday by EU statistics agency Eurostat. In October, inflation in the Netherlands ... Read more »

Centre's April-October fiscal deficit at 36.3% of Budget estimates

(Representative Image) The Centre’s fiscal deficit for April to October is well below last year’s at Rs 20,200 crore as against Rs 39,200 crores. It is also 36.3 percent less ... Read more »

Govt's excise mop-up from petrol, diesel doubles to Rs 3.7 lakh crore in FY21; states get Rs 20,000 crore

The central government’s mop-up from excise duty levied on petrol and diesel more than doubled to Rs 3.72 lakh crore in the pandemic year 2020-21, out of which states were ... Read more »

Buy TVS Motor Company: target of Rs 803: Sharekhan

Sharekhan’s research report on TVS Motor Company Aggressive product launches, forays into new markets and investments in newer and cleaner technologies would be the key growth drivers. Earnings growth was ... Read more »

Henderson continues to build up its land bank in Hong Kong, invests over US$1.1 billion in redevelopment projects

Henderson Land Development, which earlier this month bid a record HK$50.8 billion (US$6.5 billion) for a harbourfront commercial plot in Hong Kong, is gradually boosting its land bank in other ... Read more »

Buy Gland Pharma: target of Rs 4400: Sharekhan

Sharekhan’s research report on Gland Pharma Gland plans to increase the share of revenues from RoW markets to 40% (21% Currently) over next 3-4 yea led by a strong growth ... Read more »

Gainers & Losers: 10 stocks that moved the most on November 30

The market ended in the red after a volatile session on November 30. The Sensex ended 195.71 points lower, or 0.34%, at 57,064.87 and the Nifty shed 81.40 points, or ... Read more »

A look at improved gross enrolment ratio of girls in all levels of school education

(Image: News18 Creative) (Image: News18 Creative) (Image: News18 Creative) Read more »

Schiphol did not want a survey among complaining ground staff

He has been working as a handling agent at Schiphol for 32 years. Towing aircraft, loading and unloading aircraft. Cathay Pacific’s CX271 that he’s fielding on February 12, 2019 is ... Read more »

United Kingdom demands that Facebook mother sell Giphy

Photo: ANP The British market regulator has definitively ordered Facebook’s parent company to sell animation platform Giphy. The social media company’s takeover of the gif animation database in 2020 will ... Read more »

Procurement AI start-up DeepStream raises £5m to tackle supply chain headaches

Beringea, a venture capital fund, has led a funding round for DeepStream, whose customers include the electric battery manufacturer Britishvolt, Sky News understands. Read more »

Inflation in the Netherlands rises to 5.6 percent, according to provisional figures

What is inflation? Inflation is an increase in the prices of consumer goods and services. When there is inflation, you can buy less and less with the same amount of ... Read more »

Households pay more for electricity and gas transport

Photo: ANP Households will pay an average of 6 euros more (excluding VAT) next year for the rates for the transmission of electricity and gas. This is reported by the ... Read more »

Omicron cryptocurrency soars after new COVID-19 variant was similarly named

News of the new Omicron coronavirus variant caused one cryptocurrency with the same name to soar, rising almost ten-fold from Friday to Monday morning to reach $688. On Thursday, it ... Read more »

Dutch inflation at highest level in the past 24 years

Photo: ANP Dutch inflation rose to its highest level in at least 24 years in November. Average price levels also rose sharply in other euro countries, according to figures from ... Read more »

Mundra Drug Seizure | DRI records Adani Ports statement under NDPS Act

Representative image The Directorate of Revenue Intelligence (DRI) has recorded the statement of Adani Ports and Special Economic Zone (APSEZ) over the seizure of nearly 3,000-kg of heroin from Gujarat’s Mundra Port, ... Read more »
On free-english-test.com you will find lots of free English exam practice materials to help you improve your English skills: grammar, listening, reading, writing, ielts, toeic