How Can Oracle Price Feeds Be Exploited in a Derivatives Front-Running Attack?

Oracle price feeds provide external market data, like an asset's price, to smart contracts for use in derivatives settlement or liquidation. A front-running attack can occur if a malicious actor anticipates the exact moment a new price update is about to be committed to the blockchain.

They can place a trade based on the new, uncommitted price before the oracle update is finalized in the block, or exploit the temporary window between the oracle update and a subsequent trade execution. This manipulation targets the price data's integrity and timing.