Front-Running and MEV Exploitation: How Blockchain Users Pay the Hidden Tax

Every time you trade tokens on a decentralized exchange, someone else might be making money off your move-without you ever knowing it. This isn’t a glitch. It’s not a hack. It’s MEV, and it’s happening on every major blockchain that supports smart contracts. You’re not losing money because you made a bad trade. You’re losing money because someone else saw your transaction before it was confirmed and inserted their own ahead of yours to profit from it. This is front-running. And it’s part of a much bigger system called Maximal Extractable Value.

What Exactly Is MEV?

MEV stands for Maximal Extractable Value. It’s the total profit a block producer-whether a miner in the old Proof-of-Work days or a validator in today’s Proof-of-Stake systems-can make by rearranging, adding, or blocking transactions in a block. Think of it like a traffic cop who gets to decide who goes first at an intersection. If they see you’re about to turn left, they can let someone else go before you, then let you go right after, all so they can pocket a cut.

This isn’t theoretical. Back in 2021, over $554 million was pulled out of Ethereum just from MEV. By 2025, that number had climbed past $686 million. And most of it? Taken from regular users like you and me.

How Front-Running Works in Practice

Let’s say you want to buy 1,000 ETH worth of a new token on Uniswap. You send your transaction. It sits in the mempool-the public waiting room where all unconfirmed transactions hang out before being picked up by a validator.

Meanwhile, a bot is scanning that mempool 24/7. It spots your trade. It calculates: if you buy this much, the price will go up. So the bot sends its own transaction-with a higher gas fee-to buy the same token right before yours. Then, it sells immediately after your trade pushes the price even higher. Profit? Thousands of dollars. You? You paid more than you should have.

That’s front-running. And it’s not rare. It happens hundreds of times a day on Ethereum.

Backrunning and Sandwich Attacks

Front-running isn’t the only trick. There’s also backrunning-where the bot waits for your transaction to go through, then jumps in right after to cash in on the price change you created. Combine both? That’s a sandwich attack.

Imagine you’re the filling in a sandwich. The bot buys before you (top slice), you trade (filling), then the bot sells after you (bottom slice). Every bite you take makes the sandwich more expensive-and the bot walks away richer.

These aren’t just for big traders. Even small swaps on DeFi platforms like SushiSwap or Curve get hit. A $500 trade can still trigger a $150 profit for a bot. Multiply that across millions of trades, and you’ve got a hidden tax on everyday users.

Who’s Doing This?

It’s not random people. It’s teams with serious tech. MEV bots run on servers with ultra-low-latency connections to Ethereum nodes. They simulate thousands of trades in milliseconds. They use complex algorithms to predict price movements based on contract logic, liquidity pools, and order flow.

Some are run by hedge funds. Others by crypto-native firms like Flashbots, which started as a research project but now operates a major MEV relay network. Even individual developers with coding skills and a few thousand dollars in capital can set up basic bots. But the real money? It’s concentrated in the hands of a few dozen well-funded operators.

Why Proof-of-Stake Made It Worse

When Ethereum switched from mining to staking in 2022, people thought it would make things fairer. Less energy. More decentralization. But MEV didn’t disappear-it spread.

In Proof-of-Work, only miners could reorder transactions. In Proof-of-Stake, anyone who stakes ETH can become a validator. That meant thousands more people could now extract MEV. And because validators are incentivized to maximize their rewards, they’re more likely to accept MEV-rich blocks from searchers than to build honest ones.

The result? More competition. More bots. More hidden fees. The system didn’t get fairer-it got more complex, and more expensive for users.

Other Types of MEV Exploitation

Front-running and sandwich attacks are just the start. There’s liquidation MEV-where bots monitor undercollateralized loans and trigger liquidations just before the price drops, pocketing the fee. There’s time-bandit attacks, where transactions are delayed or reordered to exploit time-sensitive smart contract functions, like voting windows or auction end times.

Even something as simple as a token listing can be exploited. A bot might detect a planned token launch on a new DEX, front-run the initial liquidity pool creation, then sell immediately after the price pumps. All without ever owning the token.

Is MEV Always Bad?

Some argue MEV isn’t evil-it’s just arbitrage. If a token is priced at $10 on Uniswap and $10.50 on Coinbase, a bot buying low and selling high helps fix the price. That’s market efficiency, they say.

But here’s the catch: you don’t get the benefit of that efficiency. The bot does. And you pay for it in higher slippage, worse prices, and more failed transactions. It’s like a toll booth that only lets the rich pass through. Everyone else pays more and waits longer.

Plus, MEV can break DeFi. If a bot keeps liquidating loans just before a price rebound, it can trigger cascading failures. That’s not market correction-it’s systemic risk.

What’s Being Done About It?

There are attempts to fix this. Flashbots created MEV-Boost, a system that lets validators outsource MEV extraction to specialized searchers, while still keeping the profits shared more fairly. Some protocols now use commit-reveal schemes, where users encrypt their trades until they’re confirmed, hiding them from bots.

Others are building fair sequencing services-like EigenLayer’s restaking layer or Chainlink’s Fair Sequencing Service-that promise to process transactions in the order they’re received, not in the order that’s most profitable for bots.

But adoption is slow. Most users still don’t know MEV exists. Most wallets don’t warn you about it. And most DeFi interfaces still let you send transactions the same way they did in 2020.

What You Can Do

You can’t stop MEV. But you can reduce your exposure.

• Use wallets that support MEV protection-like Phantom or Rabby-when trading on DeFi.
• Set tighter slippage limits. If you’re trading $500 worth of tokens, don’t allow 5% slippage. Stick to 0.5% or less.
• Avoid large, round-number trades. Bots target them. Try $487 instead of $500.
• Use limit orders instead of market orders when possible. They’re slower, but bots can’t front-run them as easily.
• Wait for low-traffic times. MEV activity spikes during major news events, token launches, and price pumps.

The Bigger Picture

MEV isn’t going away. It’s a feature of how blockchains work-not a bug. As long as transactions are public and order matters, someone will find a way to profit from it.

The real question is: who gets to benefit? Right now, it’s the ones with the fastest computers and the deepest pockets. The rest of us? We’re just funding the system.

If blockchain is supposed to be open, fair, and permissionless, then MEV is a contradiction. It’s a hidden tax on the very people the technology claims to empower. Until we fix that, the promise of decentralized finance remains incomplete.