Bot-Enabled Market Manipulation Rife on Decentralized Exchanges, Researchers Claim
Marie Huillett's original article for cointelegraph.com reduced by 56%
Arbitrage bots are being widely used for manipulative profit-making strategies on decentralized exchanges, a study from researchers at Cornell Tech has claimed. The paper documents and gauges the breadth and specific characteristics of bot-executed market manipulation, which the researchers argue has developed blockchain-specific elements that undermine the underlying blockchain security of traded assets. Researchers identified strategies including front running - whereby traders see orders from others and place their own first, which can beset traditional financial markets.
Automated trading strategies within a blockchain context thus aim to optimize network latency, exploit inefficiencies and wield PGA-enabled priority transaction ordering to anticipate and exploit ordinary users' trades to the bots' economic advantage, the researchers state. The researchers analyzed a further crypto-specific manipulation, termed miner-extractable value, which they argued enables systemic consensus-layer vulnerabilities for blockchains. These strategies and a host of related others - including fee-based forking and time-based bandit attacks - pose consensus-layer security risks and a realistic threat to blockchains such as ethereum, the researchers stated.
Swiss-based Bancor - one of the DExs where researchers identified blockchain-adapted front running - told Bloomberg that the platform sets maximum gas prices to prevent attackers from bidding more to secure transaction priority.
Donate Bitcoin to this address
Scan the QR code or copy the address below into your wallet to send some Bitcoin
Donate Ethereum to this address
Scan the QR code or copy the address below into your wallet to send some Ethereum
Donate With MetaMask
Donate ETH Via PAY With Metamask
Alternatively, support us by using the following referral links:
CN [too long; didn’t read]
Summarised crypto news.