The term front running can have multiple interpretations based on the particular context and circumstances involved. Originally, front running referred to a situation where investors are aware of important information that is yet to become public and purchase an asset based on it. This practice grants a significant advantage to the investor with access to the information.
When it comes to crypto, front running is usually associated with discovering important information about a particular asset before it gains widespread attention and invests in it. Front running is a high-risk high-return move because the information we find may not necessarily create hype for the asset.
Example of front running: Gini believes that zk and layer 2 technology will be popular in the next few months and she finds information that some protocols will launch zk projects in the near future. Then, she does front running and buys several zk crypto assets that are not yet popular.
Front running is also a term used by validators and nodes. In this context, front running is a condition where a bot or validator prioritizes transactions with the most expensive gas fees in order to make a bigger profit when the next transaction comes in. Front running is part of the MEV (maximal extractable value) that validators perform to gain additional profit from transaction reordering. Front running can be very costly for users, especially in DeFi applications like UniSwap, where users end up paying exorbitant amounts of gas.
Throughput is a measure of how many transactions a blockchain can process in a certain period of time. And is usually...