Breaking Sandwich MEV in ERC-20 DeFi via Context-Aware Directional Constraints

Abstract

Decentralized exchanges (DEXs) are a core component of decentralized finance (DeFi) but remain vulnerable to Maximal Extractable Value (MEV) attacks, particularly sandwich attacks that exploit transaction ordering across accounts and blocks. Existing defenses often rely on protocol modifications or identity-based assumptions, limiting their practicality and robustness.

We present Context-Aware Directional Constraint (CADC), a lightweight application-layer defense implemented as an ERC-20–compatible token. CADC enforces directional consistency within pool-specific execution contexts and maintains a per-direction entry price to prevent both immediate and delayed profit extraction. By constraining the temporal and price conditions required for attack execution, CADC remains effective against multi-address and cross-block strategies. Evaluation on a testnet shows that CADC prevents same-block and delayed sandwich attacks while preserving normal trading behavior, with minimal overhead (2--3k gas per pool interaction, 3--8% of typical swaps). CADC provides a practical and deployable MEV mitigation without requiring changes to the underlying blockchain protocol.