Ethereum Developers Weigh Encryption to Block Trading Bots
Ethereum developers are exploring ways to protect users from predatory trading bots that exploit pending transactions. These bots can spot profitable orders in Ethereum's public mempool, a transparent waiting room where transactions can be inspected before execution.
The practice has become known as 'sandwich attacks,' where a bot buys the same asset first to move the price against the user, then sells immediately after the victim's trade executes at a worse price. In April, even Ethereum co-founder Vitalik Buterin was targeted by the notorious Jaredfromsubway.eth bot.
Developers are now weighing whether encryption can remove the informational advantage that makes these attacks possible. The goal is to conceal transaction contents until their position in a block has already been committed.
One leading proposal, EIP-8184 or LUCID, would require block builders to commit to sealed transactions containing a chargeable ticket and encrypted payload without knowing what the transaction does. However, this design creates its own set of problems, including the 'decryption dilemma.'