> For the complete documentation index, see [llms.txt](https://funarchy.gitbook.io/funarchy/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://funarchy.gitbook.io/funarchy/security-for-prediction-market/governance/whale-cartel-attack/attacker-profit-on-market-volume.md). # Attacker Profit on Market Volume ### Description To conduct a governance attack, an attacker must secure at least 51% of all valid voting power. Therefore, the attacker must invest sufficient capital to amass and control a dominant voting power. To assess governance security, it's necessary to measure the minimum cost to an attacker of obtaining a majority of voting power. However, due to token dispersion, liquidity, and circulating supply in the current market, it appears difficult for a single individual to acquire 51% of the total tokens. Therefore, we will evaluate the cost based on the whale collusion incident that occurred in the past, “Ukraine agrees to Trump mineral deal before April?”, where 30% of the tokens were controlled. {% stepper %} {% step %} **Using UMA Governance token for Attack** The total tokens used in the attack are 6M, which is 30% of the total votes. Therefore, we will set the attack cost of obtaining 30% of the tokens as ($$C\_{attack}$$ ).

{% endstep %} {% step %} #### **Cacluate cost**

Variables Definition

$$C\_{attack}$$ : Due to the token circulation, lockup, and staking structure, it's difficult to estimate the cost incurred during the attack. Therefore, we will use the current market price multiplied by the number of tokens representing 30% of the UMA voting pool. (We will proceed under the assumption that tokens were collected over a period of time at the same price, as there is a history of tokens being collected over a year in actual attacks.) * *Assumption:* $5,288,000 $$P\_{entry}$$ : The average unit price when purchasing a 'false' position in the target market. * *Assumption:* $0.01 $$V\_{market}$$ : Open-Interest (Funds currently locked in the Market) $$Share$$ : Attacker makret share * Assumption : $$V{market}\times 0.1\div P{entry}$$ (Assuming we secure 1% of $$V\_{market}$$)

Calculation Logic

If the attacker takes control of governance and establishes a false outcome as true, the tokens purchased at $0.01 will become $1.00. Therefore, the attacker's final profit and loss are as follows: $$\begin{aligned} \text{Trade Revenue} &= Share \times (1 - P\_{entry}) \end{aligned}$$ $$\begin{aligned} \text{Final Result} &= \text{Trade Revenue} - C\_{attack}\end{aligned}$$

{% endstep %} {% step %} **Cacluate Chart**

Chart

$$\text{X}$$ : $$V\_{market} (USD)$$ $$\text{Y}$$: $$\text{Final Result} (USD)$$ | Vmarket | Share | PfC | Final Profit | | ------- | ------- | ---------- | ------------ | | 10M | 10,000 | 990,000 | -4,298,026 | | 20M | 20,000 | 1,980,000 | -3,308,026 | | 30M | 30,000 | 2,970,000 | -2,318,026 | | 40M | 40,000 | 3,960,000 | -1,328,026 | | 50M | 50,000 | 4,950,000 | -338,026 | | 60M | 60,000 | 5,940,000 | 651,974 | | 70M | 70,000 | 6,930,000 | 1,641,974 | | 80M | 80,000 | 7,920,000 | 2,631,974 | | 90M | 90,000 | 8,910,000 | 3,621,974 | | 100M | 100,000 | 9,900,000 | 4,611,974 | | 110M | 110,000 | 10,890,000 | 5,601,974 | | 120M | 120,000 | 11,880,000 | 6,591,974 | | 130M | 130,000 | 12,870,000 | 7,581,974 | | 140M | 140,000 | 13,860,000 | 8,571,974 | | 150M | 150,000 | 14,850,000 | 9,561,974 | | 160M | 160,000 | 15,840,000 | 10,551,974 | | 170M | 170,000 | 16,830,000 | 11,541,974 | | 180M | 180,000 | 17,820,000 | 12,531,974 | | 190M | 190,000 | 18,810,000 | 13,521,974 | | 200M | 200,000 | 19,800,000 | 14,511,974 |

{% endstep %} {% endstepper %} #### Conclusion

Our previous calculations show that once the market size exceeds approximately $60 million, the expected return on acquiring UMA governance shares begins to exceed the cost. Currently, the market(Presidential Election Winner 2024) with the highest open interest on Polymarket is approximately $21 million. Therefore, the current open market is relatively safe, not exceeding $60 million. However, as the market continues to grow and global events, such as the US presidential election, continue to occur, this issue must be addressed. --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com. ## Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter, and the optional `goal` query parameter: ``` GET https://funarchy.gitbook.io/funarchy/security-for-prediction-market/governance/whale-cartel-attack/attacker-profit-on-market-volume.md?ask=&goal= ``` `ask` is the immediate question: it should be specific, self-contained, and written in natural language. `goal` is optional and describes the broader end goal you are ultimately trying to accomplish on behalf of the user. GitBook uses it to tailor the answer towards what is most useful for that goal. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.