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Maximizing Extractable Value from Automated Market Makers

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Financial Cryptography and Data Security (FC 2022)

Part of the book series: Lecture Notes in Computer Science ((LNCS,volume 13411))

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Abstract

Automated Market Makers (AMMs) are decentralized applications that allow users to exchange crypto-tokens without the need for a matching exchange order. AMMs are one of the most successful DeFi use cases: indeed, major AMM platforms process a daily volume of transactions worth USD billions. Despite their popularity, AMMs are well-known to suffer from transaction-ordering issues: adversaries can influence the ordering of user transactions, and possibly front-run them with their own, to extract value from AMMs, to the detriment of users. We devise an effective procedure to construct a strategy through which an adversary can maximize the value extracted from user transactions.

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Notes

  1. 1.

    We name it after Dagwood Bumstead, a comic strip character who is often illustrated while producing enormous multi-layer sandwiches.

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Acknowledgements

Massimo Bartoletti is partially supported by Conv. Fondazione di Sardegna & Atenei Sardi project F75F21001220007 ASTRID. James Hsin-yu Chiang is supported by the PhD School of DTU Compute.

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Authors and Affiliations

  1. Università degli Studi di Cagliari, Cagliari, Italy

    Massimo Bartoletti

  2. Technical University of Denmark, DTU Compute, Copenhagen, Denmark

    James Hsin-yu Chiang & Alberto Lluch Lafuente

Authors
  1. Massimo Bartoletti
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  2. James Hsin-yu Chiang
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  3. Alberto Lluch Lafuente
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Corresponding author

Correspondence to James Hsin-yu Chiang .

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Editors and Affiliations

  1. Technion - Israel Institute of Technology, Haifa, Israel

    Ittay Eyal

  2. Texas A&M University, College Station, TX, USA

    Juan Garay

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Bartoletti, M., Chiang, J.Hy., Lluch Lafuente, A. (2022). Maximizing Extractable Value from Automated Market Makers. In: Eyal, I., Garay, J. (eds) Financial Cryptography and Data Security. FC 2022. Lecture Notes in Computer Science, vol 13411. Springer, Cham. https://doi.org/10.1007/978-3-031-18283-9_1

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  • DOI: https://doi.org/10.1007/978-3-031-18283-9_1

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  • Print ISBN: 978-3-031-18282-2

  • Online ISBN: 978-3-031-18283-9

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