Combating Front-running in the Blockchain Ecosystem

Abstract Front-running is generally defined as trading upon advance knowledge of some large transaction that will influence the value of an underlying security. Due to the centralized nature of traditional financial markets, it is widely prohibited and its use eliminated by the threat of legal action. In the decentralized, trustless context of a blockchain, however, this approach is not available. This work seeks to generalize and quantify the problem of front-running, evaluate a number of proposed solutions, and contribute a framework for creating a front-running resilient blockchain system. Solutions are evaluated with particular respect to the principles and guiding goals of decentralized blockchain communities, and thus Bitcoin and Ethereum are used largely as examples throughout.