Price Discrepancy Attack

Definition ∞ A price discrepancy attack involves exploiting different prices for the same asset on various platforms to make illicit gains. This is a type of exploit in decentralized finance where an attacker capitalizes on temporary or artificial differences in an asset’s price across multiple liquidity sources or exchanges. This often involves manipulating oracle feeds or executing large, rapid trades to create an exploitable price imbalance, leading to illicit profit. Such attacks highlight the vulnerabilities of relying on external price data in smart contracts.
Context ∞ News frequently covers price discrepancy attacks, particularly in the context of flash loan exploits that target decentralized exchanges and lending protocols. These incidents underscore the critical need for robust oracle security and comprehensive price validation mechanisms within decentralized finance. The ongoing efforts to mitigate these attacks are central to enhancing the overall security and reliability of decentralized financial systems.