Arbitrage resilience refers to a system’s capacity to withstand and maintain stability amidst opportunistic price discrepancies across different markets. It signifies a state where the underlying mechanisms of a protocol or digital asset are robust enough to prevent exploitative arbitrageurs from causing significant disruptions or asset value erosion. This quality is vital for the dependable functioning of decentralized exchanges and other financial applications.
Context
The discourse surrounding arbitrage resilience frequently addresses the design of automated market makers and the implications of slippage on user experience and protocol security. Debates often focus on mechanisms that limit the impact of large trades on price discovery and the potential for smart contract vulnerabilities that malicious actors might exploit through rapid arbitrage. Observing how protocols adapt their liquidity provision and fee structures to enhance this resilience is a key area of interest.
This research establishes a rigorous, abstract theory of MEV, enabling formal security proofs against economic attacks that exploit transaction ordering.
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