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mev-toolkit/sandwich
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dr. mia von steinkirch, phd 62e390d8bf
add note on nash equilibrium
2023-02-07 15:14:01 -08:00
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interesting_examples.md Update interesting_examples.md 2023-02-07 15:04:27 -08:00
README.md add note on nash equilibrium 2023-02-07 15:14:01 -08:00

README.md

sandwiching


tl, dr

  • sandwiching occurs when a searcher identifies a profitable trade in the mempool that will cause an impact on the price of an asset.

  • a searcher buys or sells a calculated amount directly before the large trade is executed and then immediately exits their position after the large order has taken place, banking a profit.

  • the main theme of sandwich attacks is slippage caused by available liquidity in the pool, which is deterministic (trade sizes to frontrun can be calculated, allowing globally maximal profit from sandwich attacks).

  • a softer side of sandwich attacks is on the lens of economic efficiency, on which an order can create a consumer surplus and the absence of a nash equilibrium. the bot operator would love the economic system back.


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