Beware of Sandwich Attacks

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I know what you are thinking here … seagulls or your office mates!

But, no, a sandwich attack on a blockchain network is where a malicious entity — Eve — looks at the pending transactions on a blockchain network and then places one before and after the valid transaction. This means that the inserted transaction will occur before the valid one and straight after it. This can have the effect of manipulating asset prices.

For this, Eve will watch Carol’s transaction to move BobCrypto to AliceCrypto, and will predict that AliceCrypto will go up in value. Eve will then insert a buy on AliceCrypto before the transaction occurs. Next, Eve inserts a sale on AliceCrypto straight after the transaction and will be smiling on the way to the bank.

The two front-loaded transactions (Eve’s and then Carol’s) will inflate the price of AliceCrypto. After which, Eve then cashes out on the transaction after these — and brings the price back to normal, but with a likely profit for Eve. This is standard stock market manipulation, and traders have been leaking information on this type of thing for decades. On the stock market, a trader might detect another trader moving funds from the dollar to the…

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Prof Bill Buchanan OBE FRSE
ASecuritySite: When Bob Met Alice

Professor of Cryptography. Serial innovator. Believer in fairness, justice & freedom. Based in Edinburgh. Old World Breaker. New World Creator. Building trust.