A Flash Swap Attack is a type of exploit in decentralized finance where an attacker uses a flash loan to manipulate asset prices across different decentralized exchanges within a single transaction block. The attacker borrows a large quantity of assets without collateral, executes a series of trades to exploit price discrepancies, and repays the loan, all within the same atomic transaction. This attack vector capitalizes on temporary market inefficiencies and the immediate settlement capabilities of flash loans. The entire operation is either successful and atomic, or it reverts entirely.
Context
Flash swap attacks are a prominent topic in DeFi news, often resulting in substantial losses for affected protocols and liquidity providers. These incidents highlight the security challenges inherent in complex DeFi ecosystems and the necessity for robust smart contract auditing. Developers and security researchers constantly analyze and implement countermeasures to mitigate these sophisticated attacks. The ongoing evolution of DeFi security practices directly responds to the prevalence of flash loan exploits.
A critical MSB truncation flaw in a core CLMM library allowed an attacker to bypass overflow checks, minting massive phantom liquidity to drain $223 million in assets.
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