Eliminating Sandwich Attacks with the Help of Game Theory. (arXiv:2202.03762v1 [cs.GT])

Predatory trading bots lurking in Ethereum's mempool present invisible
taxation of traders on automated market makers (AMMs). AMM traders specify a
slippage tolerance to indicate the maximum price movement they are willing to
accept. This way, traders avoid automatic transaction failure in case of small
price movements before their trade request executes. However, while a too-small
slippage tolerance may lead to trade failures, a too-large tolerance allows
predatory trading bots to profit from sandwich attacks. These bots can extract
the …

attacks game game theory