Economic Attack

Definition ∞ An economic attack targets a blockchain network or decentralized application by exploiting financial incentives or market dynamics. This type of attack aims to manipulate asset prices, drain liquidity pools, or profit from protocol design flaws by overwhelming the system with capital or carefully timed transactions. Unlike cryptographic attacks, economic attacks leverage the financial structure of a decentralized system rather than cryptographic weaknesses. Examples include flash loan attacks or 51% attacks on proof-of-work chains where the cost of control becomes economically viable.
Context ∞ News frequently reports on economic attacks in the decentralized finance (DeFi) sector, often detailing flash loan exploits that drain millions from liquidity pools. Discussions center on protocol design flaws that permit such vulnerabilities and the difficulty in predicting complex financial interactions. Critical future developments include enhanced risk modeling, improved smart contract auditing with a focus on economic incentives, and the implementation of circuit breakers to mitigate the impact of rapid market manipulations.