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
Securities and Exchange Commission (SEC)
U.S. Securities and Exchange Commission, an independant agency of the US Federal government which oversees federal securities laws, proposing securities rules, and regulating the securities industry.
Order Book
An electronic list of all buy and sell orders in an exchange
Market Maker
Participant of the market who creates buy and orders
Ethereum Virtual Machine (EVM)
Ethereum Virtual Machine (EVM) is the environment in which all smart contracts are executed.
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