Smart Contract Security Glossary

Flash Loan Attack

A flash loan attack uses same-transaction borrowing to amplify an existing DeFi vulnerability, usually in pricing, collateral, governance, or accounting.

Oracle Manipulation

Oracle manipulation occurs when an attacker distorts a data source that a smart contract trusts, causing the contract to make decisions from unsafe data.

Price Manipulation

Price manipulation is the intentional movement of an asset, pool, share, or collateral price so a protocol values assets incorrectly.

Front-Running

Front-running is a transaction-ordering attack where an attacker observes a pending transaction and submits their own transaction so it executes first.

Sandwich Attack

A sandwich attack is a front-running pattern where an attacker places one transaction before and one after a victim trade to profit from the victim's price impact.

MEV

MEV, or maximal extractable value, is value that can be extracted from transaction inclusion, exclusion, or ordering beyond normal block rewards and fees.

Slippage

Slippage is the difference between the expected trade price and the actual execution price, often caused by liquidity, volatility, or transaction ordering.

ERC-20 Approval Race Condition

The ERC-20 approval race condition is a token allowance issue where a spender can use an old allowance before a new allowance change takes effect.

TWAP Oracle

A TWAP oracle reports a time-weighted average price over a chosen window instead of relying on a single spot price.

Liquidation

Liquidation is a protocol action that repays or closes an undercollateralized borrow position and transfers collateral according to the protocol's rules.

Health Factor

A health factor is a lending-risk metric that compares a borrower's adjusted collateral value against their debt.

Precision Loss

Precision loss happens when integer arithmetic drops fractional value during division, scaling, or fixed-point conversions.

Rounding Error

A rounding error is the difference between the mathematically exact result and the integer-rounded result returned by smart contract math.

Fee-on-Transfer Token

A fee-on-transfer token deducts a fee during transfer, so the recipient receives less than the amount requested by the sender.

Rebasing Token

A rebasing token changes account balances automatically when supply is adjusted, without requiring each holder to send or receive a normal transfer.

Liquidity Pool

A liquidity pool is a smart contract reserve of assets used for swaps, lending, liquidations, pricing, or vault accounting.

AMM

An AMM, or automated market maker, is a decentralized exchange design where smart contracts quote trades from liquidity and formulas instead of an order book.

Concentrated Liquidity

Concentrated liquidity is AMM liquidity provided only within selected price ranges instead of across all possible prices.

Impermanent Loss

Impermanent loss is the difference between holding assets in an AMM pool and holding the same assets outside the pool after relative prices move.

Collateral Ratio

Collateral ratio is the ratio of collateral value to debt value in a lending, borrowing, or minting system.

DAO Governance

DAO governance is an on-chain or hybrid decision process where token holders, delegates, multisigs, or members control protocol actions.

Cross-Chain Bridge

A cross-chain bridge transfers value or messages between blockchains using locks, burns, mints, validators, relayers, proofs, or messaging protocols.

Merkle Airdrop

A Merkle airdrop is a token distribution where eligible claims are compressed into a Merkle root and users prove inclusion with Merkle proofs.

Flash Swap

A flash swap is an AMM feature where a user receives tokens before paying for them, as long as repayment or equivalent value happens before the transaction ends.

Chainlink Oracle

A Chainlink oracle integration reads price or rate data from Chainlink Data Feeds, usually through AggregatorV3Interface.

Bad Debt

Bad debt is debt a protocol cannot fully recover from collateral, liquidations, reserves, insurance, or backstop mechanisms.

Loan-to-Value

Loan-to-value is the maximum borrow value allowed against collateral value in a lending system.

Liquidation Bonus

Liquidation bonus is the extra collateral value paid to liquidators for repaying unhealthy debt.

Interest Rate Model

An interest rate model calculates borrow and supply rates from protocol state, usually utilization.

Dust Position

A dust position is a very small residual balance, debt, share amount, liquidity amount, or collateral amount left after protocol actions.

Minimum Shares

Minimum shares is the least acceptable number of vault, pool, or receipt-token shares a user is willing to receive.

Slippage Tolerance

Slippage tolerance is the maximum execution difference a user accepts between an expected quote and the actual on-chain result.