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arXiv · 2106.01870

Maximizing Extractable Value from Automated Market Makers

Massimo Bartoletti·James Hsin-yu Chiang·Alberto Lluch-Lafuente
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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.

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BibTeXRIS

Massimo Bartoletti, James Hsin-yu Chiang, Alberto Lluch-Lafuente. 2021-06-02. Maximizing Extractable Value from Automated Market Makers. https://arxiv.org/abs/2106.01870

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