Maximizing Extractable Value from Automated Market Makers
Cryptography and Security
2022-07-20 v4 Computational Engineering, Finance, and Science
Formal Languages and Automata Theory
Computer Science and Game Theory
Abstract
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.
Keywords
Cite
@article{arxiv.2106.01870,
title = {Maximizing Extractable Value from Automated Market Makers},
author = {Massimo Bartoletti and James Hsin-yu Chiang and Alberto Lluch-Lafuente},
journal= {arXiv preprint arXiv:2106.01870},
year = {2022}
}
Comments
FC'22 proceedings version with proofs in appendix