Transaction Front-Running

Definition ∞ Transaction Front-Running is the practice of observing pending transactions and then submitting a new transaction with a higher fee to ensure it is processed before the observed transaction. This allows the front-runner to profit from the price movement or market impact caused by the original transaction. It exploits information asymmetry in public transaction pools.
Context ∞ Transaction front-running is a significant concern in decentralized finance, particularly on platforms where transaction ordering can be influenced by gas fees. This practice leads to debates about fair market execution and the development of various mitigation techniques, such as batch auctions or encrypted transaction pools, to reduce its impact.