How Much Must a Private Mempool Hide? Exact Leakage Thresholds for Sandwich Attacks
A theory paper gives exact size-leak thresholds for profitable sandwiches on fee-free Uniswap v2-style AMMs.
The paper derives exact leakage thresholds for sandwich attacks on a fee-free constant-product AMM, the pricing rule behind Uniswap v2. Sandwichers see an interval around the victim's size and bid in a first-price auction; feasible front-runs and guaranteed profit depend only on the smallest size consistent with the leak. The upper end of the range is irrelevant. With two or more symmetric traders, pure-strategy equilibria hand expected net rent to the auctioneer, and hiding direction blocks non-contingent first-leg sandwiches while post-trade arbitrage can survive.
- Profit depends only on the smallest trade size consistent with the leak.
- The upper bound of a leaked size range does not change feasible front-runs.
- A privacy layer may reveal size details except a lower bound above a threshold.
- With multiple symmetric traders, equilibria give expected rent to the auctioneer.
- Hiding direction blocks non-contingent front-runs; post-trade arbitrage can remain.
- Products
- Uniswap v2
- Organizations
- Uniswap
From the original article
1 min read at arxiv.orgPrivate and encrypted mempools hide pending transactions to stop sandwich attacks and other forms of maximal extractable value (MEV), but what they hide is rarely everything: a transaction's pair, direction, and a coarse range for its size can still leak. How much leakage makes sandwiching pay? We answer exactly for a fee-free constant-product automated market maker, the pricing rule behind Uniswap v2.
By Tingyi Lin · arxiv.org
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