Midnight: An Efficient Event-driven EVM Transaction Security Monitoring Approach For Flash Loan Detection

Abstract

Decentralized Finance (DeFi) has been on a roller coaster of swift changes for some years. In the DeFi world, the principal ingredients are smart contracts, which are often vulnerable to security issues. To work with these contracts, transaction submission is required. Arguably, advances in transaction analysis can benefit a whole Ethereum Virtual Machine (EVM) and non-EVM networks alike. Unfortunately, only a few open-source tools and commercial products exist that focus specifically on transactions. This research studies real-time event-driven EVM transaction monitoring and experiments with its effectiveness in performing the enormous task of transaction analysis and compares it with historical analysis approaches. In this study, EVM events were studied extensively, and Midnight, an open-source, full-stack proof of concept framework was used to experiment with the alternative approach. The research included a practical experiment on monitoring specific events called flash loan on the latest version of the popular DeFi protocol called AAVE.