How Does Low Liquidity on a DEX Increase the Profitability of a Sandwich Attack?

Low liquidity means there are fewer assets in the trading pool, so a given trade size will cause a much larger price movement (higher price impact) compared to a high-liquidity pool. In a sandwich attack, the attacker profits directly from the price movement caused by the victim's trade.

Therefore, low liquidity magnifies the price impact of the victim's order, leading to a much larger profit for the front-runner who executes the buy and sell trades around it.