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by chrisco255 1911 days ago
When a user creates a swap transaction on Uniswap, it goes into the ETH transaction queue (prioritized by gas amount). If a bot notices that a user has a large swap (say swapping $1.5M USDC for 1K ETH), a bot could theoretically 'front-run' the order (by paying a higher gas fee than the original swap) and inject say, $10M of liquidity into the expected price-band of movement caused by the trade. They could then pocket a portion of the transaction fees (whatever their fraction of the 0.3% trade fee that Uniswap charges is), and then immediately pull the liquidity out of the LP to then wait for another front-running opportunity.

This doesn't harm the person doing the swap, per se. It harms the Liquidity Providers that hold their capital in the pool for longer term.