Research Summary: Analyzing and Preventing Sandwich Attacks in Ethereum

Thanks for bringing up the user survey, @rlombreglia. So far the focus in this thread was mainly on our quantitative analysis, but I agree that it’s important to also consider the perception of users.

In order to understand their reaction, it is important to consider the time our survey was conducted. As prices were highly volatile, most users were not too concerned about receiving slightly fewer tokens from a trade than expected. This would have probably been different if prices were more stable. We also noticed that many DeFi traders had a lack of understanding (and also a lack of interest) regarding the detailed functionalities of decentralized exchanges. We were curious to learn more and extended our work in that area. Among other things, we conducted several qualitative interviews and a workshop on Clubhouse. A respective paper is currently under review for publication, and I will post it here, as soon as it is out.

Whether or not these attacks are dishonest is a difficult question. When users set a slippage tolerance for their trade, they agree to swap tokens for a given price. Most users, however, are not aware that other factors than natural price fluctuations can have an impact on their swap.

My personal opinion is also split: These attacks definitely won’t help attracting new users to the DeFi world. It should be easy and safe to swap tokens on a DeX, even for non-technical users. However, I also believe that there are examples of dishonesty and corruption in the DeFi world far worse than what we describe. Regular arbitrage trades are not too different from sandwich attacks.

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