What Is Frontrunning in Crypto? Risks and Preventive Measures

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April 28, 2025

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In crypto, frontrunning is when traders exploit access to pending transactions, placing their own trades first to profit from expected price shifts. This happens on the blockchain through public visibility: pending transactions are stored in a queue called the mempool, visible to anyone.

By submitting a transaction with a higher fee, frontrunners ensure theirs gets processed first, capturing the price movement triggered by the original trade.

Unlike traditional finance, where frontrunning depends on insider information, blockchain transparency makes it possible in crypto. While the openness of decentralized finance (DeFi) promotes trust, it also creates vulnerabilities, as frontrunners use this visibility to gain an edge.

This practice disrupts the fairness of decentralized exchanges (DEXs), making it essential for crypto traders to understand and recognize how it can affect their trades.

How Frontrunning Happens: The Mempool and MEV Bots

Frontrunning primarily takes advantage of the mempool, a public waiting area where unconfirmed blockchain transactions are held before they’re finalized. This open structure allows opportunistic traders to monitor pending transactions and act on them for profit. But one of the biggest players in this game isn’t human — it’s the MEV bot.

Maximal Extractable Value (MEV) bots continuously watch the mempool, searching for transactions that could lead to potential gains. Once they identify a profitable target, such as a large buy order that might drive up a token’s price, they can “cut in line” by submitting their own transaction with a higher gas fee.

This fee incentivizes miners to process the bot’s transaction first, effectively jumping the queue. The bot then quickly sells once the price rises, locking in a profit. These bots operate primarily on networks like Ethereum, where public access to pending transactions creates numerous opportunities for profit.

This frontrunning tactic has allowed MEV bots to extract significant value from DEXs by essentially manipulating the order of transactions to benefit themselves. The impact is twofold: while these bots bring profit to their operators, they often inflate gas fees and disrupt price stability for regular users, complicating trades and adding unforeseen costs.

Types of Frontrunning Attacks in Crypto

Frontrunning can take different forms in crypto, each with its own approach to gaining an advantage over regular traders. While the core idea is always to get ahead of other transactions, frontrunners use various tactics to manipulate transaction timing, fees, and order placement.

Here’s a closer look at the main types of frontrunning attacks you might encounter on the blockchain.

Simple Frontrunning

In a simple frontrunning attack, the frontrunner places a transaction to capitalize on a price movement they anticipate from a pending trade. If they see a large order that’s likely to raise the price of a token, they’ll put in their own buy order first, then sell after the price rises.

It’s a straightforward approach, but it can seriously impact regular traders who aren’t trying to cheat the system.

Sandwich Attacks

Sandwich attacks involve “sandwiching” another trader’s transaction between two of the frontrunner’s orders. Here’s how it works:

1. When a frontrunner spots a large buy order, they place a buy order of their own just before it to benefit from the anticipated price increase.
2. Right after the large order goes through and pushes up the price, the frontrunner quickly sells, capturing the profit from the artificial price bump.

This tactic can drain value from unsuspecting traders by forcing them to buy at a higher price than expected.

Displacement Attacks

Displacement attacks focus on delaying a victim’s transaction. In this type of attack, the frontrunner submits a series of high-fee transactions to slow down or even “displace” the original trade.

By keeping their own transactions in the lead, they prevent the victim’s transaction from being processed until they’ve had a chance to profit from it. It’s a strategy that relies on leveraging higher gas fees to maintain control of the transaction order.

Suppression Attacks

Suppression attacks create congestion to either block or significantly delay a target’s transaction. Frontrunners may flood the network with transactions, slowing down processing times and ensuring their own trades go through first.

This tactic can frustrate regular traders and skew token prices, as the frontrunner manipulates network speed to control which transactions get confirmed and which are delayed.

Is Frontrunning in Crypto Illegal?

In traditional finance, frontrunning is typically illegal, as it relies on insider knowledge that disadvantages regular investors. In crypto, however, it falls into a gray area.

Since blockchain transactions are publicly visible and decentralized, frontrunning doesn’t technically involve insider information. Instead, it’s about using publicly available data on a public ledger, complicating regulation.

The legal treatment of frontrunning in crypto varies by jurisdiction. Some frontrunning types might face scrutiny in the U.S., where regulators increasingly focus on crypto practices. In other regions, however, the decentralized nature of blockchain means that frontrunning isn’t as closely monitored, making it legal by default.

Ethically, frontrunning raises questions about market fairness. While some view it as a natural part of decentralized trading, others see it as exploitative, especially for regular traders who don’t have the same tools or access. Understanding the fine line between fair competition and manipulation will be critical for building a more equitable ecosystem.

Examples of Frontrunning in Crypto Markets

Frontrunning often involves complex strategies, some targeting specific tokens or taking advantage of emerging DeFi markets. Below are a few examples highlighting how frontrunning manifests on blockchain platforms, including these tactics’ malicious and ethical uses.

Sandwich Attack Example

A notable example worth mentioning is the attack on the CHAD token. Due to its surge in activity, it was an attractive target for frontrunners using bots to manipulate prices.

The attack started when a frontrunner detected large CHAD transactions with high slippage tolerance in the pending transaction pool. Before the victim’s transaction could go through, the attacker placed their own buy order for CHAD, paying a higher gas fee to prioritize their transaction. This caused the CHAD token’s price to spike temporarily.

When the victim’s order was eventually processed, it was executed at the inflated price. Immediately after, the frontrunner “back-ran” the transaction by selling their CHAD at the artificially high price, locking in profits from the manipulated price increase.

In total, the frontrunner spent over $1.28 million on transaction fees, but made about $1.4 million in profit within just 24 hours.

White Hat Use of Frontrunning

While frontrunning is often associated with exploitative practices, it can also serve constructive purposes, especially in cybersecurity. White hat hackers (ethical hackers focused on safeguarding users) may use frontrunning-like techniques to prevent malicious attacks and enhance security within DeFi environments.

One approach involves monitoring blockchain transactions for vulnerabilities. White hats can detect suspicious activity or potential exploits in real time, quickly intervening before malicious actors have the chance to execute harmful trades. This proactive approach mirrors frontrunning, but with the intent to protect users rather than profit from them.

Additionally, ethical hackers may simulate attacks to study the tactics, help developers understand the system’s weaknesses, and work together to implement better security measures.

White hats often go a step further by educating the community. They share insights on avoiding becoming a victim of frontrunning tactics and raise awareness about risk factors like high slippage tolerance and poor timing.

Risks and Consequences of Frontrunning in Crypto

Frontrunning isn’t just a nuisance. It can impact both individual traders and the broader market. Understanding these risks can help traders make better decisions and recognize why frontrunning remains a contentious issue in DeFi.

One of the biggest risks for individual traders is price slippage. When frontrunners jump ahead of large trades, they often buy tokens at the current price, pushing the price higher before the original transaction goes through. This results in the trader paying more than expected or receiving less of the asset they intended to buy, impacting their profitability.

Moreover, frontrunning disrupts the market’s integrity, creating an uneven playing field. This lack of fairness can erode trust in DeFi platforms, as everyday users feel disadvantaged by those with the means or tools to manipulate transaction order.

The risks for the broader market are higher when frontrunning is rampant, and regular traders and investors may avoid certain platforms, especially DEXs. This leads to reduced liquidity and activity within these ecosystems.

Frontrunning Bots: What You Need to Know

Frontrunning crypto bots are highly specialized programs designed to spot and exploit opportunities in the mempool. These bots automatically identify transactions they can profit from, pay higher gas fees to jump the queue, and execute their trades quickly to capture price shifts.

As we’ve seen with MEV bots, frontrunning bots scan the mempool for large or profitable trades and place their own transactions with higher gas fees to prioritize them.

They do this without human intervention, using code that allows them to respond instantly to potential opportunities. This automation gives them an edge over manual traders, allowing them to capture profits from unsuspecting users consistently.

While some traders may see frontrunning bots as a way to profit, interacting with them can carry significant risks:

• Unpredictable Market Impact: Frontrunning bots can create sudden and unexpected price fluctuations, making it harder for regular traders to execute trades at expected prices.
• Bot Scams: With the popularity of frontrunning bots, scams have emerged, promising users their own “profit-generating” bots. These scams typically ask for funds upfront or access to the user’s wallet, only to drain their assets or vanish. It’s essential to approach such offers cautiously and avoid unverified bot services.

How to Protect Yourself from Frontrunning in Crypto (Strategies for Users)

Frontrunning can frustrate traders, but there are ways to reduce its impact. Here are some practical strategies to help you protect your trades and minimize risks.

Lower Slippage Tolerance

Setting a lower slippage tolerance in your trade settings can limit the acceptable price change before the transaction fails. By tightening slippage, you reduce the chance of frontrunners inflating prices, though it may also mean that some trades won’t execute in fast-moving markets.

Split Large Trades

Dividing large trades into smaller chunks makes them less noticeable and appealing to frontrunning bots. This approach minimizes the profit margin bots could exploit, making it harder for them to spot and target your trades.

Privacy Transactions

Consider using privacy-focused platforms or tools that keep transaction details hidden until confirmation. Obscuring details in the mempool makes it harder for bots to identify and frontrun your transactions.

Timing

Try to execute trades during off-peak hours. Bots are especially active during high-traffic periods when transaction volumes are high, so trading during quieter times can reduce the likelihood of getting frontrun.

How to Prevent Frontrunning in Crypto (Strategies for Developers and Platforms)

In the previous section, we explored ways for individual users to protect themselves. Here, we’ll cover strategies developers and platforms can implement to reduce frontrunning risks and create a fairer trading environment.

Commit-Reveal Schemes

A commit-reveal scheme involves a two-step process where users commit to a transaction without revealing all details until later. Splitting the transaction into a “commit” phase and a “reveal” phase makes it harder for frontrunners to anticipate and exploit actions.

Batching Transactions

Batching involves grouping multiple transactions and processing them as a single unit. This approach masks individual trades, making it difficult for frontrunners to pinpoint specific transactions within the batch and reducing their chances of profiting.

Randomized Transaction Ordering

Randomly ordering transactions within a block prevents frontrunners from predicting transaction placement. By breaking the expected order, platforms can reduce the opportunities for frontrunners to benefit from precise timing.

Private Transaction Pools (Hidden Mempools)

Platforms can use private mempools, which conceal pending transactions from public view until they are confirmed. Keeping high-value transactions hidden in private mempools prevents frontrunners from seeing and targeting these trades.

Sliding Windows for Execution

Introducing sliding windows or small time delays before executing trades can disrupt frontrunners’ ability to time their actions accurately. This approach reduces transaction predictability, making it more challenging for bots to frontrun trades.

Smart Contract Audits

Regular smart contract audits help detect vulnerabilities that frontrunners could exploit. Developers can build more secure, frontrunner-resistant platforms by identifying and patching these weaknesses.

MEV-Protection Tools

Tools like CoW Swap and Flashbots offer MEV protection, shielding transactions from being reordered or manipulated by bots. These tools help ensure that trades go through without interference from frontrunners, supporting fairer market conditions.

Final Thoughts on Crypto Frontrunning

Understanding crypto frontrunning is essential for anyone active in DeFi. This practice impacts market fairness and can lead to substantial financial losses if not properly managed. As crypto grows, so does the sophistication of frontrunning tactics, making it crucial for traders, investors, and developers to stay informed and vigilant.

To protect yourself, use frontrunning-resistant platforms, apply the best practices outlined here, and continually educate yourself on potential risks. For more tips on safeguarding your crypto investments, check out our guide on cryptocurrency security.

👉 Learn More: Cryptocurrency Security Guide – How to Stay Safe in Crypto

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