A slippage attack is a malicious act where an attacker exploits temporary price differences during a decentralized exchange trade. This type of exploit occurs in decentralized finance (DeFi) protocols, particularly automated market makers (AMMs), where an attacker manipulates transaction ordering or executes large trades to cause significant price impact. The attacker profits from the difference between the expected price and the executed price due to this induced slippage. These attacks highlight vulnerabilities in liquidity pools and transaction processing mechanisms.
Context
Slippage attacks are a significant security concern in the DeFi space, often discussed alongside front-running and Maximal Extractable Value (MEV) exploits. Developers are continuously working on mitigation strategies, including improved smart contract designs and transaction sequencing mechanisms. News reports frequently cover these exploits, emphasizing the ongoing need for robust security audits and protocol enhancements in decentralized exchanges.
Insufficient liquidity during liquidation reward swaps created an economic vector, allowing a 5.2% capital drawdown on the yUSND vault through severe slippage manipulation.
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