New Study Shows Bots Have Detrimental Effect on Crypto Trading

A new study by a team of computer scientists from Cornell Tech, Carnegie Mellon University, the University of Illinois in Urbana Champaign and ETH in Zurich examined whether trading on decentralized exchanges is fair; they took a look at six exchanges over the course of 18 months; the study showed that there was a big impact from computer bots whose intention was to take advantage of information to make as much money as possible; “Like high-frequency traders on Wall Street, these bots exploit inefficiencies in [DEXes], paying high transaction fees and optimizing network latency to front-run trades,” the research paper declares according to the FT. “We observe bots competitively bidding up transaction fees in order to obtain priority ordering.” Source.

  • Todd Anderson

    Todd is the host of PitchIt: the fintech startups podcast, a weekly interview show featuring emerging fintech founders and leading venture capitalists. He is responsible for leading the content team which covers fintech through daily & weekly email newsletters, editorial, virtual events, and in-person conferences. He has been covering fintech, banking, and venture capital for more than 15 years, including speaking regularly at industry events.