Frontrun
By CoinGecko | Updated on Aug 28, 2020
In traditional finance, frontrunning or tailgating is a practice where traders or brokers execute a trade before a prior large order is executed. The said trader or broker will then sell their trades higher to the large order, owing to the order's slippage tolerance. This is highly illegal and unethical in the traditional finance. In the cryptocurrency context, frontrunning works the same but in DEX's where orders made are broadcasted to the blockchain for all to see, a frontrunner will attempt to listen to the blockchain to pick up suitable orders to frontrun by orders on the market and placing enough fees to have the transaction mined faster than the target's orders.
Related Terms
Zero Knowledge Proof
Cryptographic proof for 2 parties to verify a value without revealing what the value is.
Immutable
A property characterized by inability to be change and stays unchanged over time.
ROI
Short for “Return on Investment”, the ratio between the net profit and cost of investing.
Over The Counter (OTC)
It refers to the process that cryptocurrencies are being traded outside exchange and it is done directly between two parties
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