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It just scares me when you say things like this (linked tweet) because if projects are really going to be using serum as their only source of price data...
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To be clear:
1) I think they should use a sanitized version of it
2) Serum is on-chain. That makes it *way* different from the cases you cite; a lot of the problems you might worry about go away (at least for other projects on Solana).
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to be clear there are still a lot of nuances here but many of your points don't really apply to on-chain oracles that you can trade against composably in real time with small fees.
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Having the data being generated on-chain doesn't necessarily mean it's trustworthy
There have been numerous incidents involving DEX-based price oracles that led to millions in user funds getting lost
Promoting their usage is just downright dangerous in my opinion
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1) I think this is very different on Ethereum vs Solana. When it takes minutes to trade on a DEX and lots of tx's fail, you can't reliably hedge; that's way easier on Serum.
2) A lot of this is solved using EWMAs. E.g. mid(last, bid, offer), bounded by 5% away from 5m EWMA.
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(2) means that you'd need to sustain a bad price for minutes in order to have a significant attack, and anyone could trade against your (bad) orders on the DEX in seconds; that makes it *way* harder to attack.
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again, this isn't perfect, and you prob want to add a bunch of other sanity checks, but I do think that this ends up being way more safe than most current DEX-based oracles
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I think it comes down to the simple fact that using a single exchange as your price oracle (yes even a on-chain exchange) will always be an attack vector no matter what data calculation method you use
You need market wide coverage
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If the liquidity on the exchange your DEX based price oracle relies moves to another exchange...
Then the cost of attack lowers dramatically, price feeds that aggregate across all trading environments don't have this issue
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idk I mostly agree with you here -- having multiple exchanges is good!
I wish you'd be willing to acknowledge that there are tradeoffs here too and that having it fully on-chain is also cool, and there are pros and cons, even if you think the cons outweigh the pros.
EWMA is easier to attack than Linear TWAP in low liquidity conditions, but the price quote would be of better accuracy than Linear TWAP.
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There's trade-offs for sure, but I've seen enough DeFi protocols get hacked because of poor oracle practices that even seeing someone considering a DEX based price oracle makes me feel a bit queasy
A multi-million dollar loss in user funds lost type queasy
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oh yeah feeling queasy is *definitely* correct!
if poorly executed it's definitely fucked.
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