Transaction reordering risk is the potential for transactions to be processed in an order different from their submission sequence, leading to unintended financial outcomes. This risk arises in blockchain environments where block producers or validators can influence the arrangement of transactions within a block. Such reordering can be exploited for profit, resulting in front-running or sandwich attacks against other network participants. It poses a threat to market fairness and predictability.
Context
This risk is a primary concern in decentralized finance and is closely related to Maximal Extractable Value (MEV), where actors can profit by strategically reordering transactions. Mitigating transaction reordering risk is a key area of research and development for blockchain protocols, with solutions involving encrypted mempools and fair ordering mechanisms. News frequently covers efforts by developers and researchers to address this vulnerability to enhance the security and integrity of decentralized applications.
This research formalizes MEV using an abstract blockchain model, establishing a rigorous theoretical basis for provable security against transaction-ordering attacks.
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