This Solana swap app is trying to make sandwich attacks more costly
Solana's recent concerns regarding traders' on-chain transaction capabilities have shifted towards pricing issues. Sandwich attacks, where savvy traders manipulate price spreads to exploit less informed traders, remain a significant problem. The DFlow swap app proposes a novel solution called conditional liquidity, introducing market intermediaries called segmenters to distinguish toxic order flow from non-toxic. When a trader prepares to swap cryptocurrencies, they encounter a price quote with an adjustable slippage percentage. Sandwich attackers exploit this slippage by front-running transactions to inflate prices briefly, profiting at the user's expense. DFlow's segmenters aim to provide labeled transactions, enabling DEXs to charge higher rates to sandwichers while reducing costs for honest traders. Although this system doesn’t completely eradicate sandwich attacks, DFlow's founder believes it can significantly diminish them. Segmenters earn profits by capturing price improvements. This approach aims to align interests among retail traders, DEXs, and the broader network, with expectations that conditional liquidity will make a significant impact by 2025. However, there may be challenges in adoption by DEXs, as demand for conditional liquidity must align across trading venues.
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