Bachelor / Master Thesis
Front-running and the XRP Ledger
The XRP Ledger (XRPL, which is developed by Ripple) can also be seen as a decentralized exchange (DEX). The XRPL with its underlying blockchain provide a DEX that allow users to buy and sell tokens. Like in other DEXs, it may face the problem of front-running. This occurs when someone uses technology or market advantage to get prior knowledge of upcoming transactions and to benefit in a way that exploits this insider knowledge. Front-running is often regarded as unfair to honest participants. The XRPL documentation claims that the order of transactions, executed the ledger, is designed to be unpredictable; therefore, the XRPL discourages or eliminates front-running [1].
The goal of the thesis is to understand and formalize the XRPL as a DEX and to critically assess the front-running problem on the XRPL. Possible work may consist of theoretical studies, simulating executions, or emulating attacks. A paper by Peduzzi et al. shows an example of an arbitrage bot on the XRPL [2]. This bot automatically detects and takes arbitrage opportunities.
References
[1] Ripple Decentralized Exchange
[2] Jack the Rippler: Arbitrage on the Decentralized Exchange of the XRP Ledger