How Do Price Manipulation Attacks Target Oracle Feeds?
Attackers target oracle feeds by manipulating the price of the underlying asset on a centralized or low-liquidity exchange that the oracle uses as a source. They then quickly execute a trade on the smart contract, exploiting the manipulated price before the oracle can update or correct the feed.
Flash loan attacks are a common tool used to acquire the capital needed for such a price manipulation.
Glossar
Oracle Feeds
Data ⎊ Oracle Feeds, within the context of cryptocurrency derivatives and financial markets, represent a critical infrastructure component facilitating the secure and reliable transmission of real-world data to on-chain smart contracts.
Price Manipulation Attacks
Mechanism ⎊ Price manipulation attacks within cryptocurrency, options, and derivatives markets represent deliberate actions intended to artificially inflate or deflate the price of an asset, deviating from fair value discovery.
Target
Precision ⎊ A target, within cryptocurrency derivatives and financial markets, denotes a predetermined price level or state serving as a focal point for trading strategies and risk management protocols.
Flash Loan Attacks
Exploit ⎊ Flash loan attacks represent a unique vector of manipulation within decentralized finance (DeFi), leveraging the mechanics of uncollateralized lending to exploit vulnerabilities in smart contract code.