Your writing style is super accessible - have learned much from you. Thank you!
Did Avi take the added step of borrowing funds (versus simply cashing out the account 1 position) because the futures contract had limited liquidity available in stablecoins whereas the borrowing step increased their total payout to $117m across multiple coins?
Yes. It was much more profitable and easy to manipulate the Mango algorithm by borrowing against the contracts than to try and trick real traders into buying them. One of the pitfalls of “decentralization” DeFi style!
I am not sure I completely understand. If he sold himself futures, wasn’t he also on the losing end of the trade? Wouldn’t he have had a massive margin call on that side?
He manipulated the market so the futures showed huge profit, borrowed against the futures contracts, then withdrew all his collateral before selling off the mango token and the price tanked… so he had no collateral to lose when the futures were margin called
Your writing style is super accessible - have learned much from you. Thank you!
Did Avi take the added step of borrowing funds (versus simply cashing out the account 1 position) because the futures contract had limited liquidity available in stablecoins whereas the borrowing step increased their total payout to $117m across multiple coins?
Yes. It was much more profitable and easy to manipulate the Mango algorithm by borrowing against the contracts than to try and trick real traders into buying them. One of the pitfalls of “decentralization” DeFi style!
Great article! I have been curious as to how these grifters are grifting people .
Interesting article and gives those who setup crypto exchanges a look into how to avoid this type of manipulation.
the real crime was building a protocol that was so easily exploited. Avi did DeFi a favor by putting it out of business.
thanks for the deconstruction of the 'trade' I can understand the charges now
I am not sure I completely understand. If he sold himself futures, wasn’t he also on the losing end of the trade? Wouldn’t he have had a massive margin call on that side?
He manipulated the market so the futures showed huge profit, borrowed against the futures contracts, then withdrew all his collateral before selling off the mango token and the price tanked… so he had no collateral to lose when the futures were margin called