The world of cryptocurrency attracts not only investors and traders but also scammers. One of the common manipulation methods is the sandwich attack. This type of attack involves a malicious actor using the mechanics of transaction formation in the blockchain to profit at the expense of other users.#SandwichAttack
💎 How does a sandwich attack work?
The sandwich attack most often occurs on decentralized exchanges (DEX) such as Uniswap or PancakeSwap, where transactions are processed in an open manner and can be altered by setting a higher fee (Gas).#DEX
1. Identifying the target: the malicious actor monitors the mempool (transaction queue) and finds a large transaction to buy a specific token.
2. Front-running: the malicious actor creates their own transaction with a higher fee, buying the token before the target transaction. This increases the asset's price.#FrontRunning
3. Back-running: after the victim's transaction is executed, the malicious actor sells the recently purchased token at an already inflated price and makes a profit.
As a result, the victim buys the token at a higher price than expected, while the malicious actor profits from the difference.
💎 How to protect yourself from sandwich attacks?
• Use private pools or secure services: such as MEV-protected transactions (for example, Flashbots).
• Reduce slippage: setting a minimum selling or buying price in the DEX helps avoid manipulation.
• Use secure wallets and services: some DeFi platforms offer additional protection against MEV attacks.
• Choose unconventional gas fees: transactions with too low or too high fees are less likely to be targeted by bot attacks.
Sandwich attacks are one of many threats in the world of cryptocurrencies. It is important to understand their nature and take steps to protect your funds. Knowledge is the best weapon against manipulation!
