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Commitment Against Front-Running Attacks

Author

Listed:
  • Andrea Canidio

    (IMT School for Advanced Studies, Lucca, Italy)

  • Vincent Danos

    (DI-ENS - Département d'informatique - ENS Paris - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - Inria - Institut National de Recherche en Informatique et en Automatique - CNRS - Centre National de la Recherche Scientifique)

Abstract

We provide a game-theoretic analysis of the problem of front-running attacks. We use it to distinguish attacks from legitimate competition among honest users for having their transactions included earlier in the block. We also use it to introduce an intuitive notion of the severity of front-running attacks. We then study a simple commit-reveal protocol and discuss its properties. This protocol has costs because it requires two messages and imposes a delay. However, we show that it prevents the most severe front-running attacks while preserving legitimate competition between users, guaranteeing that the earliest transaction in a block belongs to the honest user who values it the most. When the protocol does not fully eliminate attacks, it nonetheless benefits honest users because it reduces competition among attackers (and overall expenditure by attackers). This paper was accepted by Joshua Gans, business strategy. Funding: The authors gratefully acknowledge the financial support of the Ethereum Foundation [Grant FY22-0840].

Suggested Citation

  • Andrea Canidio & Vincent Danos, 2023. "Commitment Against Front-Running Attacks," Post-Print hal-04310293, HAL.
    • Handle: RePEc:hal:journl:hal-04310293
    DOI: 10.1287/mnsc.2023.01239
    Note: View the original document on HAL open archive server: https://hal.science/hal-04310293
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    References listed on IDEAS

    as
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    4. Joshua Gans, 2023. "Cryptography Versus Incentives," Springer Books, in: The Economics of Blockchain Consensus, chapter 0, pages 85-101, Springer.
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