🕵️Private Transactions

Cakebot effectively blocks front-running and sandwich attacks.

Private transactions in blockchain are designed to protect the privacy of the parties involved. Unlike most blockchain transactions, which are transparent and viewable by anyone on the network, private transactions aim to keep certain details confidential. These details can include the identity of the sender, recipient, and the specific transaction amount.

What is Front Running?

Front running is a practice that occurs in token trading when an individual or entity with privileged access to an order book or trading platform exploits their position to execute orders before other traders.

In the context of token trading, front runners typically engage in buying or selling a cryptocurrency just before a large order is placed by another trader. By doing so, they can profit from the anticipated price movement resulting from the large order.

Private Transactions vs. Front Running:

Private transactions can complicate the strategies employed by front runners. Front runners rely on having insight into market activity, including the order book and the behavior of other traders. Private transactions obscure some of this critical information, making it more challenging for front runners to identify and exploit trading opportunities.

As a result, those who value privacy in their transactions may find some protection against front running through the use of privacy-focused cryptocurrencies.

What is Sandwich Attack?

In token trading, a sandwich attack takes place when a malicious trader strategically positions buy and sell orders on both sides of a target trader's order. For instance, if the target trader initiates a substantial buy order, the attacker places a large buy order just before it and follows it with a sizable sell order. This maneuver exploits price fluctuations, resulting in instant profits for the malicious trader while causing the target trader to receive a less advantageous price for their order.

Private Transactions vs. Sandwich Attacks:

Private transactions can add an extra layer of complexity to conducting a successful sandwich attack. This is because private transactions may obscure the identity of the target trader and their intentions.

As a result, the attacker may have less visibility into the order book and the behavior of other traders. This reduced visibility can make it more difficult for the attacker to identify suitable targets and predict their trading moves, potentially making sandwich attacks less effective.