What Is the Key Vulnerability That Sandwich Attacks Exploit on Automated Market Makers (AMMs)? ▴ Learn

What Is the Key Vulnerability That Sandwich Attacks Exploit on Automated Market Makers (AMMs)?

Sandwich attacks primarily exploit the deterministic pricing formula and low liquidity of Automated Market Makers (AMMs). AMMs use a formula to determine asset price based on the ratio of tokens in the pool.

A large buy order on an AMM significantly shifts this ratio, causing predictable price impact and slippage. The attacker's two trades (buy then sell) capitalize on this predictable price movement and the slippage accepted by the victim's transaction.

What Is the Typical Profit Mechanism for the Attacker in a Sandwich Attack?

What Is a “Sandwich Attack” and How Is It a Form of MEV?

Why Do Decentralized Exchanges (DEXs) Often Use Automated Market Makers (AMMs) Instead of Traditional Order Books?

How Do Automated Market Makers (AMMs) Create the Vulnerability for Sandwich Attacks?