WashTrading

_{spec · config}

Models wash trading on an AMM: a manipulator trades with themselves (swap A→B then B→A) to inflate reported volume. On a CLOB, self-trade prevention blocks this. On an AMM, there is no counterparty identity — any address can swap. The manipulator loses only fees, but the volume appears genuine on-chain. Estimated 40-70% of DEX volume is wash trading, used to game token listings, airdrops, and liquidity mining rewards.

sequenceDiagram
    participant M as Manipulator
    participant P as AMM Pool

    Note over P: reserves: 100A / 100B

    M->>P: swap 10A → B
    P->>M: gets 9B
    Note over P: reserves: 110A / 91B<br/>volume: 10

    M->>P: swap 9B → A
    P->>M: gets 9A (lost 1A to fees)
    Note over P: reserves: 101A / 100B<br/>volume: 19

    Note over M: started: 30A, 0B<br/>now: 29A, 0B<br/>lost 1A (fees)<br/>but generated 19 units of "volume"

    M->>P: swap 10A → B
    P->>M: gets 9B
    M->>P: swap 9B → A
    P->>M: gets 9A

    Note over M: 2 round-trips:<br/>lost ~3A in fees<br/>generated ~37 in volume<br/>volume/cost ratio ≈ 12x

• No identity check: AMM swaps are permissionless — anyone can trade, no STP
• Round-trip cost: each cycle costs fees (k grows), but cost is small relative to volume generated
• CLOB resistance: NoSelfTrades invariant in CentralizedCLOB prevents wash trading
• Batch auction resistance: NoSelfTrades in BatchedAuction/ZKDarkPool also blocks self-trades

Wash trading properties (expected to fail)

Add as INVARIANT to see counterexamples: