#Write2Earn Unfair trading practices like MEV, slippage, and front-running have long plagued decentralized exchanges, eroding both profits and the core principles of fairness. David Wells suggests that traders can spot these problems by watching for unusually high slippage, trade executions at worse-than-expected prices, and the “sandwiching” of transactions.

Watch Out for MEV, Front-Running, Traders Told

For years, the promise of decentralized finance (DeFi) has been somewhat tarnished by the persistent specter of unfair trading practices. Crypto traders on decentralized exchanges (DEXes) have frequently voiced concerns about an uneven playing field, plagued by irregularities like Maximum Extractable Value (MEV), unexpected slippage, and the insidious practice of front-running.

As a Feb. 13, 2024, op-ed in Bitcoin.com News explains, irregularities like MEV, when toxic, pose an existential threat to the blockchain industry. This is because such irregularities not only erode profitability but also undermine the very principles of transparency and fairness that DeFi aims to uphold.

To overcome these and other associated challenges, crypto traders must rely on experienced professionals or learn ways to decode red flags themselves. For traders choosing the latter option, David Wells, CEO of Enclave Markets, a firm focused on creating fairer trading environments, encourages them to understand on-chain activity. Wells points to several key warning signs that should raise alarm bells.

“Traders should look for several warning signs that indicate MEV and front-running issues. First, consistently experiencing price slippage beyond what market volatility would justify is a major red flag,” the CEO states.

Traders should also monitor transaction timing for signs of front-running, where trades execute at worse prices than expected. If this constantly happens, that is “often evidence of front-running.” Additionally, traders must check the blockchain for sandwich attacks by analyzing transactions immediately before and after theirs.