https://rekt.news/return-to-the-dark-forest/

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Before transactions are etched into the history of the blockchain, they must first pass through the Ethereum mempool; a digital limbo where detection means death.

Flowing across nodes in multiple, shifting forms, the waters of the mempool are as vague as they are dangerous. Unconfirmed transactions are a feast for trading bots, and they are fed upon with a malignant efficiency.

Apex predators haunt the mempool, systematically accruing profits by using the pool to engineer price movements.

Ethereum is littered with the corpses of transactions that have been frontrun before they could fulfil a trade, typically followed by repeat transactions that only continue to generate revenue for the frontrunner, miners and infrastructure operators.

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The dark forest theory was first expounded in Liu Cixin’s science fiction novel of the same name. It is a theory for how interstellar civilizations interact and a potential explanation as to why the universe is silent.

Inside the dark forest, civilizations are separated by huge stretches of space and time. Resources are scarce, yet life is always expanding, creating the ultimate competition.

When one civilization confronts another, a chain of suspicion is created. As the distance is vast and the stakes are high, suspicion intensifies into mutual annihilation. Anticipating this, the most advanced civilizations keep tabs on all life in the universe, and instantly destroy it as soon as it reveals its location.

As with Cixin’s civilisations, Ethereum frontrunners must maintain an instantaneous picture of all transactions on the network. Speed is critical, and the most competitive frontrunners target a transaction within milliseconds. The better the picture, the more profits they accrue.

Frontrunning is zero-sum: the success of a frontrunner is directly proportional to the suffering of others. Recent events indicate that frontrunning is evolving away from Ethereum’s open architecture into pay-to-play infrastructure and mining.

Frontrunners have found a powerful edge.

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The fastest frontrunner always wins.

Due to Ethereum’s open market for fees, mining pools give transaction finality to the highest bidder. Frontrunners observe a transaction in the mempool, and send the same transaction with a higher fee, driving up the price of a trade.

However, even high gas fees aren’t a reliable way to have your transaction processed quickly. Transactions share a common bottleneck: the speed at which they are propagated.

At its basis, frontrunning is a race: a quick draw, played out on the quicksand of Ethereum’s peer-to-peer network. Frontrunners will pay a premium to play first.