Malicious Signer

A signer could sign maxAllowedQuotes number of HOTs with:

\begin{equation} \begin{aligned} \text{New AMM Spot Price} &= \text{HotPriceDiscounted} \\ &= \text{HotPriceBase} \\ &= \text{oracle price} \times \left(1 + \frac{\text{maxOracleDeviationBips}}{1 \times 10^4}\right) \end{aligned} \end{equation}

After each quote lands, the signer can perform the following actions:

1. Hot Swaps: Buy maxTokenVolume of the token from the hot swap at a maxOracleDeviationBips discount.

2. AMM Swaps: Arb the AMM spot price back to the actual price and keep the profits. The loss incurred by the LPs depends on the precise price range bounds of the liquidity position ( set by the Liquidity Provider ) and the amount of effective liquidity in the pool

Bundling maxAllowedQuotes number of malicious quotes in 1 block could lead to LP losses if the bounds are not set correctly.

Moreover, if the maxAllowedQuotes is set to a high value, the upper bound on losses incurred per block could increase, which would reduce the manager's efficacy in detecting such attacks early and pausing the contracts.