Mempool Sniping

The mempool (memory pool) is a network node's holding area for unconfirmed transactions. It is the public source of all pending intent, making it the primary data feed for sniping bots. Bots monitor this pool for specific transaction patterns, such as large DEX swaps, to identify profitable opportunities before the transactions are included in a block.

This is the core action of sniping: seeing a pending transaction and submitting a new transaction to execute before it. The goal is to profit from the anticipated market movement caused by the original transaction. For example, a bot might buy an asset before a large buy order executes, aiming to sell it back at a higher price immediately after.

A specialized, automated form of frontrunning targeting DEX liquidity pools. The attacker sandwiches a victim's swap:

• First leg: Buys the same asset as the victim (frontrun).
• Victim's transaction executes, pushing the price up due to the constant product formula.
• Second leg: Sells the now more valuable asset (backrun) for a profit. The victim receives worse slippage.

Sniping is a race determined by latency (speed to see the transaction) and transaction priority (gas price). After identifying a target, bots engage in a priority gas auction (PGA), outbidding each other with higher gas fees to ensure their attacking transaction is placed immediately before the victim's in the block. This makes sniping extremely capital-intensive.

Mempool sniping is a primary source of Maximal Extractable Value (MEV). While it provides liquidity for searchers and revenue for validators/proposers (via transaction ordering), it creates negative externalities:

• User Slippage: Victims get worse execution prices.
• Network Congestion: PGAs drive up base gas fees for all users.
• Centralization Pressure: Advantages those with the fastest infrastructure and capital.

Several protocols and techniques aim to reduce the surface for sniping:

• Private Transactions: Using services like Flashbots Protect or Taichi Network to submit transactions directly to block builders, bypassing the public mempool.
• Commit-Reveal Schemes: Hiding transaction details until they are committed on-chain.
• DEX Design: Implementing mechanisms like time-weighted average market makers (TWAMMs) or threshold encryption to obscure intent.

The most frequent target. Bots monitor the mempool for large swap orders that will move the price of an asset in an Automated Market Maker (AMM) pool. They execute a transaction to buy the asset first (front-running) and then sell it into the victim's larger trade for a profit. This is also known as sandwich attacking.

Bots compete to be the first to trigger the liquidation of an undercollateralized loan in protocols like Aave or Compound. The first bot to submit a valid liquidation transaction earns a liquidation bonus or fee. This creates a Priority Gas Auction (PGA) where bots bid up gas prices to win the right to execute.

During high-demand NFT collection mints, bots snipe transactions to mint tokens at the public sale price. They use strategies to:

• Front-run the mint transaction to secure a token before others.
• Bundle multiple mints into a single block to maximize allocation.
• Exploit reveal mechanisms by back-running transactions to buy revealed rare NFTs before listings appear.

Transactions that trigger oracle price updates (e.g., on Chainlink) are targeted because the new price can create immediate arbitrage opportunities. A bot can see the pending update, calculate the mispricing on DEXs, and place an arbitrage trade to profit the moment the new price is reflected on-chain.

Bots target transactions related to governance proposals (to influence voting outcomes at the last second) and airdrop claim functions. For airdrops, they may front-run claims to purchase the newly claimable token on the open market before a sell-off, or back-run to sell immediately after the victim claims.

While arbitrage is a legitimate market activity, sniping bots specifically look for pending transactions that create an arbitrage opportunity. For example, a large trade on one DEX that creates a price discrepancy with another DEX. The bot front-runs the victim's trade to capture the arb profit that the victim's own transaction would have generated.

A broader class of predatory trading where an actor exploits advanced knowledge of a pending transaction to profit. Mempool sniping is a specific on-chain form of front-running. Other forms include:

• Time-bandit attacks: Reorganizing blocks to insert or censor transactions.
• DEX arbitrage bots: Sniping profitable arbitrage opportunities revealed by pending swap transactions.

The total value that can be extracted from block production beyond standard block rewards and gas fees. Mempool sniping is a primary source of on-chain MEV. It is often performed by searchers who bundle their snipe transaction with a payment to a block builder or validator to guarantee inclusion, a practice central to the MEV supply chain.

A cryptographic technique to hide intent during transaction submission. A user first submits a commit transaction (containing a hash of their intent). Later, they submit a reveal transaction that shows the actual details. This prevents front-running during the commit phase, as the sniping agent cannot decipher the profitable action.

A proposed layer-2 or consensus-level solution to enforce fair transaction ordering. Instead of ordering by gas price (which enables sniping), FSS uses a decentralized algorithm (e.g., first-come-first-serve based on time of receipt) to order transactions, neutralizing many forms of front-running and MEV extraction.

The mechanism snipers exploit. Users attach a priority fee (tip) to their transaction's gas price to incentivize validators to include it. Snipers monitor for high-value targets and outbid them by submitting a competing transaction with a higher gas price, creating a gas auction. This often results in gas price wars that drive up network costs.