SparkDEX – How to Stop Trading with Toxic Liquidity
How to determine if liquidity has become toxic? Toxic liquidity is a pool condition in which a liquidity provider (LP) systematically loses to high-volatility counterparties due to adverse order selection and MEV exposure; signs include slippage spikes, volume imbalances, and an increase in sandwich attacks. Flashbots research (2021–2023) documents the dominance of sandwich patterns during …
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