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In this scenerio, could both attackers turn a profit from this attack? I imagine it would work, but I want to be certain.

Tx No. Description
Tx0 Attacker 1 trades A for B
Tx1 Attacker 2 trades A for B
Tx2 Victim trades A for B
Tx3 Attacker 2 trades B for A
Tx4 Attacker 1 trades B for A
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  • Mathematically it could be significantly profitable under certain condition, but these conditions are very unlikely to happen in the real life. Even in the unlikely case when the attackers want to collaborate (why?), there's not much reason for them to do it like this.
    – kfx
    Dec 10, 2022 at 17:14

1 Answer 1

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In this scenario, it is possible for both attackers to turn a profit from the attack.

Here is how the attack would work:

  • Attacker 1 trades A for B. This increases the demand for B and drives up its price.
  • Attacker 2 trades A for B. This further increases the demand for B and drives up its price even more.
  • The victim trades A for B, buying B at the inflated price.
  • Attacker 2 trades B for A, selling B at the inflated price and buying A at a lower price.
  • Attacker 1 trades B for A, selling B at the inflated price and buying A at a lower price.

In this way, both attackers can profit from the attack by buying A at a lower price and selling B at a higher price. The victim, on the other hand, will end up buying B at the inflated price and selling A at a lower price, resulting in a loss.

However, it is important to note that this type of attack is not always successful. The attackers must carefully coordinate their trades and maintain the illusion of high demand for B in order to drive up its price. If other market participants catch on to the attack, they may start selling B, causing its price to drop and undermining the attackers' profits. Additionally, the attackers' profits will be limited by the difference between the prices of A and B, so if the price difference is small, the attackers may not be able to make much of a profit.

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