1) Was literally reading this off while this guy posting, so writing a thread to summarize this piece. As I'm also a victim of sandwich attack, I'm always wondering how dark is the forest? It tries to quantify the estimated overall EV for sandwich attacks, liquidations and arbs.
2)Destructive Front-Running: Front-runs txs causing the execution of subsequent txs to fail.
Cooperative Front-Running: Front-runs txs still ensuring the subsequent txs to be successful. e.g. Sandwich attacks.
3) Back-running: Executing a tx shortly after a prev tx, e.g. oracle update txs and within sandwich attacks.
Clogging: clog or jam the blockchain to prevent others from issuing txs.
4) Sandwich attacks: The analysis observes that 61.88% of the attacks use different accounts to issue the front and back running txs
5) while a sandwich attack adversary will likely try to position its transactions relatively close to the victim transaction, in practice we observe multiple profitable sandwich attacks where the involved transactions are more than 200 block positions apart.
6) 87.61% of the back-running transactions only 0 to 1 GWei less than prev txs. Also identified 49 smart contract addresses attempting to extract value simultaneously.
7) Fixed spread liquidations: Due to @compoundfinance allows any participant to update the price oracle with an authenticated message. The back-running liquidations have higher gas prices on Compound.
8) Arbitrage: most traders prefer simple strategies that only involve 2 or 3 markets (aka. two-point arbitrage and triangular arbitrage). Less than 2% of the transactions execute strategies with more than four markets.
9) Clogging: Clogging attacks on #Ethereum can be successful because 79% of the miners order transactions according to the gas price.
10) This is what appears to have happened with the infamous Fomo3D game, where an adversary realized a profit of 10, 469 ETH by conducting a clogging attack over 66 consecutive blocks (from block 6191962 to 6191896).
11) While clogging appears expensive, the costs can be written off.
12) Identifying Non-Broadcast Transactions: When comparing those with the transactions we observed on the network layer, we find that 136,143 mined transactions were not broadcast prior to being mined. We hence can conclude that 1.64% of the transactions are being privately.
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1) My third thread aims to jot down some thoughts on the “conflicting” views that are often presented in crypto’s primary and secondary market. Quoting “A New Era of Financial Market Behavior” by @ashwathbk
2) There are so many misunderstanding elements for primary& secondary investment/trading. Newbies are often jealous about how primary market participants getting 100x ROI with many of them still at their book value which is a useless metrics to chase.
3) They often forget there is a significant opportunity cost component within the primary market opportunities. You might be locking your money for several years and slowly getting them back across the time horizon.
1) My second thread aims to try to cover some of the “conflicting” views between the crypto native and TradFi. Recently, I’ve seen a wave of #TradFi people joining crypto to start a project. As a #crypto native, here are some thoughts.
2) Firstly, welcome to #crypto and joining the wild east. You will see so many things that can be improved or leveraging the knowledge of TradFi to innovate in this young and vibrant industry.
3) Being a #crypto native meaning I’m forming my view about my life, financial market, and many other things mostly from crypto, although I have a finance background, I started to work in the crypto industry immediately after I graduated from university.
2) #DeFi has experienced tremendous growth over the past year. With a total value locked of more than $100 Billion at its peak across all chains, growing from just over $ 1 Billion TVL roughly a year ago.
3) As the industry continues innovating and building momentum, #DeFi protocols are becoming increasingly sophisticated with their design and mechanisms. Hoping to bring structured products like risk hedging products, financial derivatives to the decentralized financial sector.
1) On AMM vs Orde book for tokenized risk protocols. During this “bear” trend, we are seeing several tokenized risk protocols such as @pendle_fi@element_fi@APWineFinance@SwivelFinance popping up in the market.
2) I believe these tokenized risk protocols could form the basis of the interest/yield rate market for #DeFi, and potentially create a #LIBOR market for DeFi.
3) There were a few proposals in the early DeFi days, such as DIPOR (LIBOR for Open Finance) @TheBlock__ and CIRI (Crypto Interest Rate Index) @MessariCrypto. However, there weren’t enough DeFi infrastructure protocols to facilitate the creation of the #DeFi benchmark rate.
1) @solana's lightning-fast environment makes on-chain derivatives/options protocol interesting. A thread on the Solana on-chain derivatives protocol.
2)@SoteriaCurrency is a P2P perpetual swap protocol uses @PythNetwork oracle to access index prices and SPL standard for long/short positions. It leverages pool-based AMM for better liquidity and market accessibility, liquidation is handled through 3rd party liquidators.
3) @ZetaMarkets and @MoetFi is an under-collateralized options trading protocol on @solana. It uses a hybrid CLOB and vAMM model that allows for efficient pricing and deep liquidity, achieving under-collateralization.