What Is the Difference between an Oracle Attack and a Governance Attack?
An oracle attack targets the integrity of the price data fed into a smart contract, leading to incorrect execution based on false prices. A governance attack targets the decision-making process of a decentralized autonomous organization (DAO).
In a governance attack, an attacker acquires enough voting power (e.g. through a flash loan of governance tokens) to pass a malicious proposal, such as draining the treasury or changing critical protocol parameters.
Glossar
Flash Loan
Mechanism ⎊ A flash loan is a unique, uncollateralized loan mechanism in decentralized finance that allows users to borrow assets for a very short duration, typically within a single blockchain transaction.
Governance Attack
Exploitation ⎊ A Governance Attack within cryptocurrency, options, and derivatives contexts represents a manipulation of on-chain voting mechanisms to enact proposals detrimental to the protocol’s long-term viability or to extract value illegitimately.
Decentralized Autonomous Organization
Governance ⎊ Decentralized Autonomous Organizations represent a novel framework for coordinating collective action, particularly relevant within cryptocurrency ecosystems and increasingly, financial derivatives markets.
Oracle Attack
Exploitation ⎊ An Oracle Attack, within cryptocurrency and derivative markets, represents a manipulation of data feeds ⎊ oracles ⎊ that provide external information to smart contracts.
Voting Power
Measure ⎊ Voting Power is the quantifiable metric representing the degree of influence a specific participant holds over the outcome of a decentralized governance vote, usually derived from the quantity of staked or delegated tokens they control.
Governance Risks
Framework ⎊ Governance Risks, within cryptocurrency, options trading, and financial derivatives, represent a multifaceted challenge stemming from the decentralized and often novel structures governing these assets and markets.