How Do Decentralized Exchanges (DEXs) Mitigate Reentrancy Risks in Their Swap Functions?
DEXs, particularly those using Automated Market Maker (AMM) models, mitigate reentrancy by ensuring all internal state updates (token balances, pool reserves) are completed before any external token transfer is initiated. This adheres strictly to the Checks-Effects-Interactions pattern.
Additionally, many modern DEXs use non-reentrant function modifiers to explicitly lock the function during execution, preventing external calls from re-entering the swap logic.
Glossar
Decentralized Exchanges
Access ⎊ These platforms offer permissionless entry to cryptocurrency and tokenized asset markets, democratizing capital deployment into novel financial structures.
Reentrancy Risks
Vulnerability ⎊ Reentrancy risks arise when a smart contract makes an external call to another contract before updating its internal state variables.
Function Modifiers
Calibration ⎊ Function modifiers within cryptocurrency derivatives represent parameters adjusting model outputs to reflect observed market behavior, crucial for pricing and risk assessment.
Internal State Updates
Updates ⎊ Internal State Updates refer to the modification of variables and data structures maintained within a smart contract as a result of executing transactions or receiving external data inputs, such as oracle price reports.
Automated Market Maker
Architecture ⎊ Automated Market Makers (AMMs) represent a paradigm shift in decentralized exchange (DEX) design, moving away from traditional order book models to a constant function market mechanism.