SynthesisDeFi - Anchored TWAP

14 thg 11, 2024

A simple Anchored TWAP created by Oliver Fujimori

Key Concept
TWAP is calculated by taking the average of multiple asset prices at regular time intervals across a set period. By averaging out these prices, TWAP helps smooth out short-term fluctuations, providing a more stable price representation over time.

Advantages of TWAP
Simplicity: The TWAP calculation is straightforward and computationally light, making it practical for on-chain calculations in DeFi.
Protection Against Flash Loan Attacks: By averaging prices over time, TWAP offers some protection against temporary price manipulations commonly seen with flash loans.

Uses and Benefits of TWAP
Reducing Market Impact for Large Orders: TWAP is used as a strategy for executing large orders by breaking them into smaller parts over a period, ensuring that the average execution price is close to the TWAP value, reducing the risk of price manipulation.

Minimizing Slippage: In DeFi, TWAP provides a stable price reference by averaging prices over time, making it less susceptible to sudden price changes (slippage) that can occur in highly volatile markets.

Protection Against Manipulation: TWAP prices are less vulnerable to flash loan attacks and sudden price spikes since they rely on multiple price points over a period rather than a single spot price.

14 thg 11, 2024

Phát hành các Ghi chú

A simple Anchored TWAP created by Oliver Fujimori

Key Concept
TWAP is calculated by taking the average of multiple asset prices at regular time intervals across a set period. By averaging out these prices, TWAP helps smooth out short-term fluctuations, providing a more stable price representation over time.

Advantages of TWAP
Simplicity: The TWAP calculation is straightforward and computationally light, making it practical for on-chain calculations in DeFi.
Protection Against Flash Loan Attacks: By averaging prices over time, TWAP offers some protection against temporary price manipulations commonly seen with flash loans.

Uses and Benefits of TWAP
Reducing Market Impact for Large Orders: TWAP is used as a strategy for executing large orders by breaking them into smaller parts over a period, ensuring that the average execution price is close to the TWAP value, reducing the risk of price manipulation.

Minimizing Slippage: In DeFi, TWAP provides a stable price reference by averaging prices over time, making it less susceptible to sudden price changes (slippage) that can occur in highly volatile markets.

Protection Against Manipulation: TWAP prices are less vulnerable to flash loan attacks and sudden price spikes since they rely on multiple price points over a period rather than a single spot price.