Introduction

This section delves into calculating the change in the price of OP tokens in case of an attack. This is an important metric in calculating DIVS. For an attack to happen the attacker has to buy up a massive amount of tokens from the market. Similarly, they will have to sell them off later in order to make a profit. In both these scenarios there will be a change in the price. This price change also ultimately defines whether the attacker makes a profit or loss.

For convenience, we will call this factor d.

Methods of Calculating d

We have explored several different approaches to calculate d as accurately as possible. They are as follows:

Quantitative Approach

In this method, we identify all the factors affecting d and formulate an equation that can give us the value by plugging information into the equation. This was one of the earliest methods explored by us. We identified several factors and then narrowed them down to the following,

$$ d = P_a + S + C_o + S_l $$

Where:

• Acquisition Premium Pa: Cost incurred when purchasing tokens in large quantities.
• Sentiment S: Market and community reaction to the attack.
• Opportunity Cost Co: Capital cost from token acquisition to liquidation.
• Liquidation Slippage Sl: Impact on token price due to bulk liquidation.

Acquisition Premium Pa

The Acquisition Premium represents the additional cost per token incurred by an attacker when purchasing large quantities of tokens.

• When tokens are accumulated gradually over several days, the premium remains lower.
• However, acquiring tokens in a short time frame significantly increases the premium due to market impact and liquidity constraints.

Based on our analysis, up to 12.65% of the daily trading volume can be traded without significantly affecting the price.

Condition for Premium Application:

• If (Total volume of tokens / Number of days) >12.65% of daily traded volume, a premium is applied.