Probabilistic Liquidity Attacks in DeFi
summary
Breaks down the XSUSHI/Cream pattern into concrete steps: flash loans fund two accounts, one does recursive borrowing of xSUSHI and the other withdraws underlying SUSHI to skew the xSUSHI/QX price, then liquidations extract ETH. Builds a simple probabilistic model with random variables (C, qm, Q) and derives upper/lower profit bounds, uses Bayesian live property testing and concentration inequalities* to estimate attack probability, finds Cream was exploitable while Aave remained safe under its liquidity conditions.
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chapters (6)
- 0:00Introduction to DeFi attacks
- 1:00The Aave X Sushi incident
- 2:30Attack mechanism analysis
- 5:20State space modeling
- 10:44Probabilistic bounds and tests
- 13:26Generalizing DeFi security
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