2021/06/02 by Bartoletti, Massimo, Chiang, James Hsin-yu, Lluch-Lafuente, Alberto · 2 citations
#68N30 #Computational Engineering #Computer Science and Game Theory (cs.GT) #Cryptography and Security (cs.CR) #FOS: Computer and information sciences #Finance #Formal Languages and Automata Theory (cs.FL) #I.6.4 #and Science (cs.CE)
paper · doi:10.48550/arxiv.2106.01870
Automated Market Makers (AMMs) are decentralized applications that allow users to exchange crypto-tokens without the need for a matching exchange order. AMMs are one of the most successful DeFi use cases: indeed, major AMM platforms process a daily volume of transactions worth USD billions. Despite their popularity, AMMs are well-known to suffer from transaction-ordering issues: adversaries can influence the ordering of user transactions, and possibly front-run them with their own, to extract value from AMMs, to the detriment of users. We devise an effective procedure to construct a strategy through which an adversary can maximize the value extracted from user transactions.