Summary
Using our risk framework and Uniswap V3 price impact tool we give MKR a strong oracle rating.
This report is related to eIP 10.
Methodology
For maximum security of the oracle, it needs to fulfil 3 criteria:
- Liquidity is provided over the full price range
- Elevating the TWAP (Time-Weighted-Average-Price) to a meaningful extent is impossible or extremely costly.
- Depressing the TWAP to a meaningful extent is impossible or extremely costly.
For more in-depth research on the nature of attacking TWAPs, check out Michael Bentley’s research paper and Seraphim Czecker’s video explanation .
Analysis
Full Range
https://info.uniswap.org/#/pools/0xe8c6c9227491c0a8156a0106a0204d881bb7e531
MKR/WETH appears to have full range liquidity (non-zero% is 100%) provided by a multitude of liquidity providers (8198 initialised #).
Cost of Attack
We have analysed the cost of moving the TWAP of MKR/WETH by 20% up and down over 1 to 10 blocks. The results are:
This shows that manipulating the TWAP over a 1-2 block attack (the most realistic for an attacker) would cost at least $50 million, which is extremely expensive.
Conclusion
Given the presence of full-range liquidity and substantial cost of attack, we give the asset above a strong oracle rating.