Comments - cryptotickerr
📚   As peer-to-peer transactions based on smart contracts, decentralized exchanges are vulnerable to protocol flaws. These flaws tend to look similar to vulnerabilities in legacy financial systems like blind raising or counter-bidding. In this empirical study, Cornell University researchers look at arbitrage bot activity against known and unknown methods of exploiting discrepancies in smart contract security protocols. Through various scenarios, like front running or counter-bidding, the researchers show how differences between smart contract security and base-layer consensus security offer viable rewards for exploitive programs. How DEXs manage time lag, bidding orders, and other arbitrage opportunties has real world effects for actual customers. Empirically, bots were always profitable P2P systems in Cornell's research, meaning the opposite trading party consistently lost money when paired with a bot. While mistakes on P2P do happen, the certainty of profit for bots points toward remaining protocol issues for DEXs to address - Link 0 Comments



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