Trading Bot Glossary

Trading Bot Glossary explains 25 terms for on-chain bot developers and MEV searchers, covering strategies, order flow, block production, and low-latency infrastructure.

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Trading bots & strategies

Bot types, trading signals, and on-chain execution strategies.

Sniping Bot: A sniping bot is an automated trading program that attempts to buy a token as soon as a chosen launch, liquidity, or trading event occurs. It combines event detection, transaction construction, and rapid submission to compete for an early execution position.
Copy Trading Bot: A copy trading bot automatically submits trades based on activity observed from selected wallets or traders. In on-chain systems, it identifies relevant swaps, applies sizing and risk rules, and sends its own transaction rather than reproducing the original trader's exact execution.
Smart Money Tracking: Smart money tracking is the analysis of wallets labeled as sophisticated or historically successful market participants. Trading systems use their transactions, holdings, and position changes as research inputs or signals; the label reflects a methodology rather than proof of future investment skill.
DEX-CEX Arbitrage: DEX-CEX arbitrage is a strategy that trades a price difference between a decentralized exchange and a centralized exchange. It typically pairs opposing trades across venues and evaluates the spread after trading fees, on-chain execution costs, slippage, and inventory rebalancing.
Atomic Arbitrage: Atomic arbitrage executes linked on-chain trades within a transaction that either completes as a whole or reverts. A successful trade cycle aims to finish with more value than it started with after protocol fees, execution costs, and any financing costs.
Backrunning: Backrunning is the placement of a transaction after another transaction to act on the state changes it creates. In decentralized trading, a backrun may arbitrage prices after a swap or respond to a lending position becoming eligible for liquidation.
Frontrunning: Frontrunning is the execution of a trade or transaction ahead of another known or anticipated transaction to benefit from its expected effect. In on-chain markets, transaction visibility and ordering influence whether such a strategy can be attempted.
Sandwich Attack: A sandwich attack places one trade before a target swap and another after it to profit from the target's price impact. The attacker typically opens and closes a position around the target, while the target receives worse execution within its permitted constraints.
Liquidation Bot: A liquidation bot monitors collateralized lending positions and submits transactions to liquidate eligible debt. It repays part of a borrower's debt and receives collateral under the protocol's liquidation rules, seeking compensation above execution and financing costs.
Market Making: Market making is the provision of buy and sell liquidity to facilitate trading. An automated market maker strategy manages quotes or liquidity positions while balancing spread income or fees against inventory exposure, adverse selection, and operating costs.

MEV, order flow & block production

How transactions reach builders, compete for ordering, and enter blocks.

Maximal Extractable Value (MEV): Maximal extractable value (MEV) is the value obtainable from controlling the inclusion, exclusion, or ordering of transactions beyond standard block rewards and transaction fees. It arises when execution order changes outcomes, including arbitrage, liquidation, and some forms of harmful trade reordering.
MEV Searcher: An MEV searcher is a participant that finds transaction-ordering or state-dependent profit opportunities and constructs transactions to capture them. Searchers commonly run automated systems for arbitrage or liquidation and compete through speed, information, execution quality, and bids.
Mempool: A mempool is a node's collection of transactions awaiting inclusion in a block. Nodes can have different views because of network connectivity, admission rules, and timing; a mempool is not a single globally synchronized queue of every pending transaction.
Private Order Flow: Private order flow consists of transactions or trade intents shared through restricted routes instead of being broadcast openly to all public-network observers. Access can be limited to selected builders, relays, auction participants, or other execution intermediaries.
Transaction Bundle: A transaction bundle is a group of transactions submitted with execution or ordering conditions to a compatible service. Searchers use bundles to coordinate linked actions, but inclusion rules, allowed reverts, ordering, and atomicity vary across providers and chains.
MEV Block Builder: An MEV block builder constructs candidate blocks by selecting and ordering transactions and bundles. In proposer-builder arrangements, the builder offers a candidate payload to a proposer through the network's accepted mechanism, often bidding for the right to have it proposed.
MEV Relay: An MEV relay is an intermediary in some proposer-builder systems that helps convey builder bids and execution payloads to proposers. In Ethereum's MEV-Boost model, relays participate in payload validation and the exchange between builders and validators.
Proposer-Builder Separation (PBS): Proposer-builder separation (PBS) divides block construction from block proposal. Specialized builders assemble candidate transaction payloads, while proposers select and propose a candidate under the network's rules, allowing the two roles to operate with different infrastructure.
Order Flow Auction: An order flow auction is a mechanism in which participants bid for opportunities associated with transactions or trading intents. It can allocate execution rights or backrunning opportunities and may return part of the resulting value to the user or order originator.
Preconfirmation: A preconfirmation is an early commitment or signal about transaction inclusion or execution before the chain's usual confirmation or finality point. The strength of that signal depends on who issues it, what is promised, and how the promise is enforced.

Low-latency blockchain infrastructure

Solana data interfaces and chain-specific sequencing mechanisms.

Solana Shred: A Solana shred is a fragment of block data distributed through Solana's propagation pipeline. Data and coding shreds allow receivers to reconstruct ledger information despite missing packets, supporting delivery before every downstream consumer has a complete executed-block view.
Yellowstone gRPC: Yellowstone gRPC is an open-source interface for streaming Solana validator data through a Geyser-based plugin. Applications subscribe to filtered updates such as accounts, transactions, slots, and blocks using gRPC rather than repeatedly polling an RPC endpoint.
Jito Bundle: A Jito bundle is a group of up to five Solana transactions submitted to Jito's Block Engine for sequential, atomic execution within one slot. A bundle is intended to execute all its transactions successfully or none, under Jito's documented execution conditions.
Stake-Weighted QoS (SWQoS): Stake-weighted quality of service (SWQoS) is a Solana mechanism that allocates transaction-ingress capacity according to stake-associated connections. It helps leaders manage incoming traffic under load and influences how transactions reach the processing pipeline.
Sequencer Feed: A sequencer feed is a stream of messages from a rollup's sequencing system that exposes the order assigned to transactions or batches. Nodes and trading systems consume it to follow the sequencer's view before relying solely on later settlement-layer publication.