WHAT ARE FLASH CREDIT ATTACKS? PART 1

[yuyuna]

HI Guys

• In an instant loan attack, the borrower can trick the lender into believing that the loan has been fully repaid, even if it has not.
• Technically, the thief impersonates the borrower and takes the instant loan from the loan record. The protocol is then used to manipulate the market and defraud lenders. In some cases, attackers create arbitrage opportunities to exploit vulnerable smart contracts. In this way, attackers can buy tokens on the cheap or sell them at higher prices for exploitable contracts.

Why are instant credit attacks happening at DeFi?

• Instant credit attacks are common because they are the easiest and fastest to execute.
• This is because the protocols associated with instant credits are not yet immune to new attacks and manipulation. Because transactions occur in seconds,hackers can attack multiple markets at once.
• The most commonflash credit attacks in DeFiare the fake arbitrage opportunities we mentioned above. In a flash credit attack, an attacker creates an arbitrage opportunity by changing the relative value of a trading pair of tokens. This can be done by using their credit tokens to fill the contract and create slippage.

How can DeFi systems protect themselves from flash credit attacks?
The vast majority of DeFi hacks are flash credit attacks. Because the technology is new, vulnerabilities are not immediately apparent and may require experienced developers to identify them.
Flash credit attacks can cost DeFi protocols and their usershundreds of millions of dollars. Thus, security measures must be in place to ensure that the protocol is reliable and clean.
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Edited by honeyman1, 06 December 2024 - 05:21 PM.