Economic Exploit

Definition ∞ An economic exploit is a manipulation of a system’s design or incentives to gain an unfair financial advantage. In decentralized finance (DeFi), this often refers to leveraging protocol vulnerabilities or market inefficiencies to extract value, rather than a technical hack of the underlying code. Examples include flash loan attacks that manipulate asset prices on decentralized exchanges, or reordering transactions to front-run other users. These actions capitalize on the economic logic of a protocol, leading to significant losses for other participants.
Context ∞ Economic exploits remain a persistent threat within the DeFi landscape, highlighting the ongoing security challenges of complex smart contract interactions. A critical discussion involves distinguishing between legitimate arbitrage and malicious manipulation, as the lines can sometimes appear blurred in open, permissionless systems. Developers are increasingly focused on economic security audits and formal verification methods to identify and mitigate such vulnerabilities before deployment. The industry continues to develop more robust risk assessment frameworks to counter these sophisticated attacks.