Optimized Trade Execution
Optimized trade execution schemes are the least invasive approach to prevent front-running. These approaches adjust the trade parameters to make potential front-running attacks unprofitable. Thus, these schemes have negligible impact on the underlying blockchain system but are limited in scope.
Professional Market Makers
Instead of utilizing an automated market maker, these approaches introduce a professional market maker to handle trades and are expected to execute them at market price. Generally, these approaches involve off-chain agreements on exchange rates and on-chain transaction execution.
Trusted Third Party Ordering
Trusted third party ordering refers to schemes that entrust a trusted third party with the ordering. Transactions are sent directly to the trusted third party who then orders them. Thus, these schemes order transactions efficiently while compromising decentralization and security.
Algorithmic Committee Ordering
In algorithmic committee ordering schemes, a committee oversees the transaction ordering. Transactions are sent directly to the committee and the committee agrees upon a fair ordering through consensus. Generally, these approaches can handle less than one third of the committee members being byzantine.
On-Chain Commit & Reveal
The on-chain commit & reveal approaches order transactions in two phases. In the first phase, users commit to their transactions by broadcasting their encrypted transaction which is included on-chain. In the second phase, after some time the transaction is either decrypted automatically once the private key becomes available or by the users themselves.
Off-Chain Commit & Reveal
Off-chain commit & reveal protocols order transaction in two phases. In the first phase, users send their transactions to a committee. The committee then agrees on an order through consensus. In the second phase, once the order is agreed upon, the committee decrypts the transaction with their threshold signatures.
Randomized Ordering
In randomized ordering protocols, transactions are gathered over a set period and then executed in a random order to prevent front-running on the blockchain. This approach ensures unpredictability and fairness in transaction processing but may not be ideal for time-sensitive trades. Depending on the specific protocol, these transactions might be encrypted or not.