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Sandwich clips

Sandwich Clamp Tool

Sandwich clips


Sandwich clips

    Sandwich attacks are one of the popular pre-emptive trading techniques used in DeFi. In order to form a "sandwich" trade, the attacker (or predatory trader, as we call him) finds a pending victim trade and then tries to sandwich the victim with a back-and-forth trade. This strategy is derived from the method of buying and selling assets and thus manipulating their prices.

    The transparency of the blockchain, and the delay in executing orders (often with network congestion), makes it easier to preempt transactions and greatly reduces their security.

    All blockchain transactions are available in the memory pool (mempool). Once predatory traders notice that a potential victim's pending asset X transaction is used for asset Y, they buy asset Y before the victim does. predatory traders know that the victim's transaction will raise the price of the asset, and thus plan to buy asset Y at a lower price, allowing the victim to buy it at a higher price, and then finally sell the asset at a higher price.

Sandwich attack analysis

    The idea is simple and easy to implement. While some data suggests that professional predatory traders earn roughly $4,000 per day from plundering, there are a variety of actual operational techniques, follow our analysis to see exactly how the sandwich attack can be implemented. Before we begin, we briefly explain 6 small related concepts.

Automatic Market Maker (AMM)

    This is a predefined pricing algorithm that automatically performs price discovery and market making based on the assets in the liquidity pool. The automated market maker runs the liquidity provider (LP) to follow and follow the market and then sets the bid price ask price, and the liquidity recipient in turn trades with the automated market maker.

Price Slippage

    This is the change in the price of the asset during the trading process. Price slippage is predicted based on the number of assets traded and the available liquidity. The more assets traded, the higher the expected slippage will be. The expected slippage will be calculated prior to the trade.

Unexpected price slippage is a price increase or decrease that occurs during the course of a trade for some unknown or unpredictable reason.

Expected execution price

    The expected price is calculated based on the AMM algorithm and the X/Y state. This is the price that liquidity recipients expect when they start trading.

Executive Price

    The time required to execute a transaction may significantly change the expected execution price and the state of the AMM market.

Unexpected price slippage

    The difference between the execution price and the expected execution price.

Accidental Slippage Rate

    Unexpected slippage in excess of expected prices.

    For example, the liquidity taker wants to trade 1X for 20Y at a price of 0.05 Y units. the trade takes some time and when it is finally executed, the price may have changed and is now 0.1 Y units. At this price, the liquidity taker can only buy 10Y for 1X. The unexpected slippage is 0.05 (0.1 ? 0.05). On the other hand, if the execution price drops to 0.25 Y units, the liquidity taker can now buy 40 Y for 1 X. The unexpected slippage here is -0.15 (-0.25 - 0.1).


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