Buyer Extraction

Definition ∞ Buyer extraction refers to the process where market participants gain an advantage by observing pending transactions and front-running buy orders, often in decentralized exchange environments. This activity can result in buyers paying higher prices or receiving fewer assets than anticipated due to predatory trading strategies. It highlights vulnerabilities within certain automated market maker designs. Such practices diminish fair market participation for typical users.
Context ∞ Buyer extraction remains a critical concern in decentralized finance, particularly within liquidity pools and decentralized exchanges where transaction ordering can be manipulated. Debates often address solutions like transaction ordering fairness and MEV (Miner Extractable Value) mitigation strategies. Regulatory scrutiny on market manipulation in digital asset markets also frequently addresses these practices.