Token swap manipulation involves illicitly influencing digital asset exchange prices or execution. This illicit activity entails deliberately distorting the price or execution parameters of token exchanges on decentralized platforms for personal financial advantage. Common tactics include flash loan attacks, which rapidly borrow and repay large sums to affect prices, or sandwich attacks, where an attacker places orders before and after a victim’s transaction. Exploiting liquidity pool imbalances also serves this purpose.
Context
Token swap manipulation remains a persistent challenge in decentralized finance, frequently reported in news concerning flash loan exploits and arbitrage opportunities. The industry is actively pursuing countermeasures like transaction ordering protection and improved liquidity depth to mitigate these attacks. Regulatory bodies are also examining these practices in the context of market integrity.
A logic flaw in the internal balance management function permitted unauthorized withdrawals, compromising $128 million across the multi-chain vault architecture.
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