Multiblock MEV opportunities & protections in dynamic AMMs

ArXiv ID: 2404.15489 “View on arXiv”

Authors: Unknown

Abstract

Maximal Extractable Value (MEV) in Constant Function Market Making is fairly well understood. Does having dynamic weights, as found in liquidity boostrap pools (LBPs), Temporal-function market makers (TFMMs), and Replicating market makers (RMMs), introduce new attack vectors? In this paper we explore how inter-block weight changes can be analogous to trades, and can potentially lead to a multi-block MEV attack. New inter-block protections required to guard against this new attack vector are analysed. We also carry our a raft of numerical simulations, more than 450 million potential attack scenarios, showing both successful attacks and successful defense.

Keywords: Maximal Extractable Value (MEV), Constant Function Market Making, Liquidity Bootstrap Pools (LBPs), Market Microstructure, Algorithmic Trading, Cryptocurrency

Complexity vs Empirical Score

• Math Complexity: 7.5/10
• Empirical Rigor: 8.0/10
• Quadrant: Holy Grail
• Why: The paper employs advanced mathematical derivations for multi-block MEV analysis in dynamic AMMs, including price manipulation costs and arbitrage returns, while backing its claims with over 450 million numerical simulations testing attack viability under proposed guardrails.

  flowchart TD
    A["Research Goal: Are new MEV attack vectors introduced<br>by dynamic weights in AMMs?"] --> B["Methodology: Mathematical & Simulation Analysis"]
    B --> C["Input: 450M+ Simulated Scenarios"]
    C --> D{"Key Computational Process:<br>Analyze inter-block weight changes vs. trades"}
    D -- Attack Vector Detected --> E["Outcome 1: Discovery of Multi-Block MEV Attack"]
    D -- Defense Tested --> F["Outcome 2: Validation of Inter-Block Protections"]
    E & F --> G["Conclusion: Dynamic AMMs require<br>new specific MEV protections"]