Volume Weighted Average Price (VWAP)
(Redirected from VWAP)
"VWAP oracles are similar to TWAP oracles, but they also integrate price data from a variety of liquidity pools. Then the oracle mechanism normalizes the price differences using each market’s trading volume. Many designs use median price in order to avoid the impact of outliers, which may be the result of an attack or error. As a result, VWAP oracles take a wider view of price action and reduce the impact of price manipulation on specific markets.
VWAP feeds can integrate several data sources to increase accuracy and security. The calculation of the broader market reduces the effectiveness of a flashloan attack.
As an example, assume we’re tracking the price of some asset using the same conditions as above (60 minute period; 1 minute intervals). Instead of using only Uniswap to calculate prices, we could also integrate prices from Coinbase, Binance, Kraken, and Gemini. An attacker would need the liquidity and timing to affect all 5 markets in a coordinated manner in order to take advantage of some exploit.
TL;DR it’s much harder to impact the price of an asset on multiple markets than just one."
