Time Is Money: Incentivized Causal Transaction Ordering

2026-07-13

AI Summary

This work addresses the lack of causal ordering guarantees in blockchain transaction sequencing, which renders systems vulnerable to frontrunning and sandwich attacks, thereby discouraging users from submitting functional transactions. To mitigate this, the paper introduces PRECEDE, a novel mechanism that, for the first time in a practical setting, enforces transaction causality through a bid-based, superlinearly weighted random draw. Rather than relying on technical constraints or centralized sequencing, PRECEDE eliminates attackers’ economic incentives at the incentive layer itself. The mechanism is compatible with existing censorship-resistant blockchains’ ordering interfaces and requires only minimal modifications for deployment. Theoretically, it achieves a Nash equilibrium that effectively deters frontrunning behavior.

Abstract

Front-running is a subtle and persistent problem for blockchains. A blockchain is a stateful virtual machine executing instructions called transactions. Users earn rewards by publishing functional transactions essential to the system. Attackers observe these transactions and publish their own ahead of the users', seizing the reward and eroding users' incentive to publish functional transactions. Preventing front-running means enforcing causality: If an attacker receives transaction tx_A and then publishes transaction tx_B, then tx_A must be ordered before tx_B. However, this causality is only observed by the attacker. Practical systems order transactions by bid amount, so transactions willing to pay more get executed first, but this only results in a bidding war eroding users' rewards. Though numerous ordering approaches have been proposed, none achieves causality, leaving users vulnerable to front-running. We present PRECEDE, a mechanism-design approach that enforces transaction causality by removing the economic incentive to front-run. PRECEDE orders transactions by a power-weighted randomized lottery, whose winning probability grows super-linearly in the bid. The user's strategy of publishing a transaction with a deterring bid forms an equilibrium where the attacker refrains from competing. Moreover, PRECEDE prevents the prominent sandwich attack, which relies on front-running. PRECEDE can be directly deployed in any censorship-resistant blockchain with a simple change to its transaction ordering mechanism.

Problem

• front-running
• transaction ordering
• causality
• blockchain
• incentive

Innovation

• front-running
• causal transaction ordering
• mechanism design
• power-weighted lottery
• blockchain