Front-running is a stock market term that refers to using inside information to get into the market ahead of competitors. So it’s kind of insider trading.
Front-running isn’t limited to stock markets and decentralized finance (DeFi) — it can happen in non-fungible token (NFT) markets as well. This happens because the insiders of the NFT platform know which NFTs will be highly recommended by the trading website.
Additionally, with this information, they can buy the NFT before it gets a referral, ultimately increasing its price. The reason for the price increase is that these NFTs are sold publicly, allowing insiders to make substantial profits.
Therefore, this kind of front-running is called insider trading because the assets are traded based on non-public information. For example, in September 2021, Nate Chastain, product director of NFT marketplace OpenSea, was found to have purchased an NFT in advance before it entered the OpenSea recommendation list. Then he sold them at a profit.
He uses inside information, such as information on which NFTs OpenSea will recommend, to gain an unfair advantage. However, a clever user discovered this illegal behavior by comparing the transaction timest