Top Cardano-powered DEX MinSwap saw front-running exploit

Minswap investigates a front-running attack on its platform after a user called their attention to a suspicious transaction. 

Minswap, one of Cardano’s foremost multi-pool decentralized exchanges, experienced a front-running attack yesterday, Dec.8.

The attack was first discovered by a Twitter user CryptoVincenzio when he noticed that an account was frontrunning orders and taking profits:

Hey @MinswapDEX
Care to explain this? Seems like someone is frontrunning orders and pocketing the profits?

Minswap executes my exact order at the exact same time, except yours goes through for cheaper and then you immediately sell and pocket the 171 ada my order generated? pic.twitter.com/ay5BiZl7gA

— Hova (@CryptoVincenzio) December 8, 2022

Minswap subsequently replied, stating that they were already investigating the incident on the DEX as well as other platforms:

We are aware and investigating possible front running on Minswap DEX and other DEXs. We are working on a fix to prevent it from happening again and we are working hard to finish that as soon as possible. The team will publish more information in the following hours.

— Minswap Labs (@MinswapDEX) December 8, 2022

After a couple of hours, MinSwap announced it had fixed the issue. The attacker canceled newly created orders because they could not “get ahead of the user.”

Front-running is trading stock or any other financial asset by a broker who has inside knowledge of a future transaction that is about to affect its price substantially. In crypto, front-running typically occurs when a miner or a full node operator with access to information on pending transactions places an order that would make them profit on the pending trade.

The attack is not the first security scare the exchange, with a total value locked (TVL) of $28.45 million, had experienced this year. In March, MinSwap disclosed that it had discovered a smart contract vulnerability during its audit, which could have been devastating if bad actors had exploited it.

Front-running is a type of attack when a trader has inside knowledge of a future transaction that will substantially affect the asset price. In crypto, front-running typically occurs when a miner or a full node operator with access to information on pending transactions places an order that would make them profit on the pending trade.

Bad actors involved in front-running scams often conduct these attacks with the help of bots. Front-running bots are designed to scan the blockchain for pending transactions and then pay a more significant gas fee so that miners process its transaction first to front-run a major trade that will affect market pricing.