A recent report by Cornell Tech University shows that de-centered exchanges are flooded with trading robots that make money and manipulate the cryptocurrency market. You may be curious as to how trading robots manipulate the encryption market to gain benefits? Michael Lewis of Wall Street has also exposed this phenomenon in "Flash Boys 2.0" (Chinese paper titled "Striker: Wall Street Rebellion"). In this report, the trading robot can earn a huge profit by charging a higher transaction fee, performing a positive run and reordering the trade (both are illegal).
· Frontal operation means charging a higher transaction fee and entering the transaction before changing the big deal in the market. The resulting arbitrage (the price change of the same product in a short period of time) is earned by repurchasing or selling at a new price.
· Trade reordering: This is a bank term that refers to changing the order of financial transactions, maximizing consumer transaction fees and other costs. Since the blockchain smart contract requires transaction sorting, the robot has a prioritization function that can transfer funds in or out and quickly gain revenue. These two illegal activities are common on legal tender trading platforms.
How serious is the manipulation of the cryptocurrency market?
The report shows that this issue is very evident in the decentralized exchanges, and the community can see the changes in the transaction. The report tracks robotic trading at six exchanges, including Bancor and Ether Delta. Both exchanges mentioned have arbitrage robots with a profit of up to $20,000 per day.
Decentralized exchange design flaws threaten the security of the underlying blockchain . These machines have similar market arbitrage behaviors such as "frontal operation, malicious delay optimization, etc.", as Michael Lewis disclosed in "Flash Boys", which is a very common routine on Wall Street.
In short, cryptocurrency exchanges already have traditional illegal trading monetization behavior. However, the centralized exchanges where data is not public are even worse. The author believes that the central bank's illegal profits reach billions of dollars.
In fact, the problem of decentralized exchanges is just the tip of the iceberg in the exchange industry. At the time of this writing, IDEX is the largest de-centered exchange with a market capitalization of 119th at coinmarketcap.com and a volume of approximately $1 million within 24 hours. Centralized exchange leader Binance has a volume of $970 million in 24 hours. The former's trading volume is 0.01% of the latter.
Do you believe in going to the central exchange?
In each trading market, insiders continue to harvest short-term investors . Sadly, as BeIn Crypto recently revealed, even Bloomberg (news platform) may be involved in bribery to make the market volatile. The more illegal means of breaking the news, the less the trader knows who to trust.
Of course, after the proper investigation, the basic value of the trade will bring benefits to investors. If you want to get a profit in the short term is like gambling, insiders do have more advantages.
So in the long run, investments with real potential underlying value can bring profits to investors. The return on investment based on value purchases rather than speculation can exceed any insider trading.
Do you think it is necessary to track and stop robot-assisted arbitrage transactions? Does this practice disrupt the investment market? Please let us know what you think in the comments below!
Source of this article: First class warehouse
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