Research Summary
The article titled “Understanding Optimal Swap Behavior for Mempool Transactions” discusses the optimization of transactions in Decentralized Exchanges (DEXs), focusing on the issue of “sandwiching”. Sandwiching is a practice where value is extracted from a swap operation by surrounding it with trades on the same assets. Despite the prevalence of sandwiching, most users have yet to adopt protective measures, indicating a need for simpler solutions. The authors propose intelligent trade structuring, which optimizes both the number of trades and per-trade parameters, as a potential solution. This can be implemented purely on DEX frontends without additional trust assumptions or changes to infrastructure.
Actionable Insights
- Address Sandwiching: Sandwiching remains a major issue for transactions submitted openly via the mempool. Measures need to be taken to address this issue and protect users’ transactions.
- Implement Intelligent Trade Structuring: Intelligent trade structuring, which optimizes both the number of trades and per-trade parameters, can be a potential solution to the issue of sandwiching. This can be implemented on DEX frontends without additional trust assumptions or changes to infrastructure.
- Encourage Adoption of Protective Measures: Despite the availability of protective measures, most users have yet to adopt them. Efforts should be made to encourage the adoption of these measures to protect users’ transactions.
