[benreesman]

Semi-aside: the term “front running” is pretty overloaded and more than a little charged at this point. It gets applied to a whole spectrum of activities from the socially positive (racing to the inside with a post-only limit order to minimize the still positive price improvement) to the murky and probably kind of shady (MEV ecosystem) to outright fraud (an agency execution firm literally loading up before executing a client’s block, intentionally mispricing an IPO).

I would submit that it’s probably best just avoided by anyone who’s objective is clear communication. It’s still great for ruckus-making, but that’s probably more of a bug than a feature on HN.

FWIW I’m also very skeptical of modern MEV-world. I just think “front running” is a bad term for anything these days.

[ISL]

Came here to write the same. I'm real happy when someone runs ahead of my limit orders and provides me liquidity/execution. If I wanted to pay less, I would have set the limit lower.

[pcthrowaway]

You can set a slippage tolerance when you make an order on a decentralized exchange. It's basically the same as a limit order priced to market, where you effectively set the "most you're willing to buy for" / "least you're willing to sell for" and occasionally get better rates.

With a DEX your transaction might just not execute at all some of the time of creating the transaction, so you might burn a transaction, and there's no orderbook for the order to sit in til later.

[biolotthek]

What you call socially positive others may call execution cost. Because you might improve on a pension fund limit order. So it's best to not get into this territory.

[benreesman]

A non-aggressing order (I'll use post-only limit as an example, but as you probably know there are a zillion kinds of PoL and IOC and flags and stuff that meet this criteria) strictly makes the book deeper, or narrower, or both.

A pension fund (or rather the agency execution-type firm that they'd be crazy not to employ for block trades) wants deep books and narrow spreads: if they were in the business of collecting maker rebates then they'd be market makers, which would make them terrible pension fund managers.

If their agency execution firm is able to shave a bit of slippage/friction off by leaving some passive orders in the book I suppose they might have some luck with that, but there's no way that punishing retail traders with wider spreads on the off chance that an agency execution firm has to have a socially-approved client is a net win under any definition of socially positive. Execution cost for non-advanced actors is wide spreads, shallow insides, and high fees: strict market makers improve all of that.

People who make arguments like this one are usually day traders with no business using limit orders. I'm not saying that's what you are, but that's usually where you hear it: certainly to the extent that this argument has an intellectual pedigree other than that awful Lewis book, that's it.

[kmeisthax]

Another semi-aside: The term "censor transactions" needs to be abandoned, because it accepts the whole "money is speech" nonsense at face value.

I'm willing to begrudgingly accept "money spent to effect speech is speech" but no further. The vast majority of crypto transactions do not fall within that narrow bucket, and using the word "censor" to refer to reversing them with a 51% attack is propaganda.

[Cameri]

My understanding is that when people say Money is speech what they really mean is that it is a human right.

When an authority freezes your bank accounts (like Trudeau/Freeland did to the truckers) they infringe on your other rights (right to property, right to shelter, right to assembly , etc) demonstrating how much of a slave people are under these regimes.

When a payment processor cuts you off without recourse, they also infringe on your rights.

Money that most people know today is a terrible way to store value as it is also a tool for the state to control them.

Ethereum is now another government tool since a great percentage of transactions are validated within the US jurisdiction and are thus subject to the same draconian laws as federal bank issued money.

[siftrics]

You're arguing against basic human rights.

[nurettin]

It just means detecting a transaction before it happens and executing it earlier for monetary benefit.

[benreesman]

In a PoW cryptocurrency blockchain context, maybe? Though I think the much more precise term MEV captures that nicely.

The etymology of the term "front-running" goes at least as far back as the name "Reuters" and the use of pigeons to be the microwave towers of the day: https://www.reuters.com/article/rpb-historyofspeed/the-long-..., and probably a great deal further. I imagine the actual origin of the term is lost in deep antiquity due to the fact that someone with tradable information in hand would profit more by "running" than by walking.

I don't personally deal for profit in mempool analysis, but I'm the "low-latency guy" to enough people that do that I've had to learn the mechanics of a few of the big chains, which is frankly time that I'll never get back, and while the Nash equilibria are far less stable/obvious in this world than in a good old fashioned price-time precedence order-book, it looks pretty fucking shady to me.

[nurettin]

It is used as a trading term in hedge funds. It is shady and heavily regulated by SEC unless you are crazy enough to trade crypto or fx where SEC can't regulate anything.