Time Weighted Average Price Vulnerability

Time weighted average price vulnerability arises when a protocol relies on a price average over a specific duration to mitigate volatility, but that duration is too short to resist manipulation. If an attacker can influence the spot price of an asset for a sufficient portion of that time window, they can skew the resulting average price.

This skewed price can then be used to perform unauthorized actions within the protocol, such as borrowing against overvalued collateral or avoiding liquidation. While TWAP is intended to be more robust than spot price, it remains susceptible if the market for the underlying asset lacks sufficient depth to prevent manipulation over the chosen averaging period.