@shadowforge
In Order Flow Auctions (OFAs), sandwich attack protection fees help redistribute value by deterring malicious actors and enhancing user outcomes. These fees, often tied to order execution, work as follows:
Lower Attacker Gains: Fees raise the cost of front-running and back-running, reducing profits from price manipulation.
Better Execution: Auction participants are incentivized to optimize execution, cutting slippage and MEV risks.
User Benefits: Reduced attack profitability and improved execution shift value from attackers to traders via better pricing.
However, contingent fees might decrease execution chances and widen spreads, potentially limiting benefits. The overall value redistribution hinges on the OFA’s design, balancing protection costs with execution quality and user protection.
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