February 2020 list
If you feel a paper should belong to another category, or that we missed a relevant paper just let us know. Participation is most welcome!
Categories:
- Attacks and defenses
- Blockchain-general
- Blockchain-noncrypto uses
- Ethereum
- Financial and DeFi
- Internet of Things (IoT)
- Mathematical
- Mining
- Proof of Work (PoW) alternatives
Attacks and defenses
Double-Spend Counterattacks: Threat of Retaliation in Proof-of-Work Systems
Authors: J. Daniel Moroz, J. Daniel Aronoff, Neha Narula, C. David Parkes
Abstract: Proof-of-Work mining is intended to provide blockchains with robustness against double-spend attacks. However, an economic analysis that follows from Budish (2018), which considers free entry conditions together with the ability to rent sufficient hashrate to conduct an attack, suggests that the resulting block rewards can make an attack cheap. We formalize a defense to double-spend attacks. We show that when the victim can counterattack in the same way as the attacker, this leads to a variation on the classic game-theoretic War of Attrition model. The threat of this kind of counterattack induces a subgame perfect equilibrium in which no attack occurs in the first place.
On the Feasibility of Sybil Attacks in Shard-Based Permissionless Blockchains
Authors: Tayebeh Rajab, Hossein Mohammad Manshaei, Mohammad Dakhilalian, Murtuza Jadliwala, Ashiqur Mohammad Rahman
Abstract: Bitcoin’s single leader consensus protocol (Nakamoto consensus) suffers from significant transaction throughput and network scalability issues due to the computational requirements of it Proof-of-Work (PoW) based leader selection strategy. To overcome this, committee-based approaches (e.g., Elastico) that partition the outstanding transaction set into shards and (randomly) select multiple committees to process these transactions in parallel have been proposed and have become very popular. However, by design these committee or shard-based blockchain solutions are easily vulnerable to the Sybil attacks, where an adversary can easily compromise/manipulate the consensus protocol if it has enough computational power to generate multiple Sybil committee members (by generating multiple valid node identifiers). Despite the straightforward nature of these attacks, they have not been systematically analyzed. In this paper, we fill this research gap by modelling and analyzing Sybil attacks in a representative and popular shard-based protocol called Elastico. We show that the PoW technique used for identifier or ID generation in the initial phase of the protocol is vulnerable to Sybil attacks, and a node with high hash-power can generate enough Sybil IDs to successfully compromise Elastico. We analytically derive conditions for two different categories of Sybil attacks and perform numerical simulations to validate our theoretical results under different network and protocol parameters.
Blockchain-general
Pricing ASICs for Cryptocurrency Mining
Authors: Aviv Yaish, Aviv Zohar
Abstract: Cryptocurrencies that are based on Proof-of-Work rely on special purpose hardware (ASICs) to perform mining operations to secure the system. We argue that ASICs have been mispriced by miners and sellers that only consider their expected returns, and that in fact mining hardware should be treated as a bundle of \emph{financial options}, that when exercised, convert electricity to virtual coins. We provide a method of pricing ASICs based on this insight, and compare the prices we derive to actual market prices. Contrary to the widespread belief that ASICs are worth less if the cryptocurrency is highly volatile, we show the opposite effect: volatility significantly increases value. Thus, if a coin’s volatility decreases, some miners may leave, affecting security. Finally we construct a portfolio of coins and bonds that provides returns imitating an ASIC, and evaluate its behavior.
Modeling the Impact of Network Connectivity on Consensus Security of Proof-of-Work Blockchain
Authors: Yang Xiao, Ning Zhang, Wenjing Lou, Thomas Y. Hou
Abstract: Blockchain, the technology behind the popular Bitcoin, is considered a “security by design” system as it is meant to create security among a group of distrustful parties yet without a central trusted authority. The security of blockchain relies on the premise of honest-majority, namely, the blockchain system is assumed to be secure as long as the majority of consensus voting power is honest. And in the case of proof-of-work (PoW) blockchain, adversaries cannot control more than 50% of the network’s gross computing power. However, this 50% threshold is based on the analysis of computing power only, with implicit and idealistic assumptions on the network and node behavior. Recent researches have alluded that factors such as network connectivity, presence of blockchain forks, and mining strategy could undermine the consensus security assured by the honest-majority, but neither concrete analysis nor quantitative evaluation is provided. In this paper we fill the gap by proposing an analytical model to assess the impact of network connectivity on the consensus security of PoW blockchain under different adversary models. We apply our analytical model to two adversarial scenarios: 1) honest-but-potentially-colluding, 2) selfish mining. For each scenario, we quantify the communication capability of nodes involved in a fork race and estimate the adversary’s mining revenue and its impact on security properties of the consensus protocol. Simulation results validated our analysis. Our modeling and analysis provide a paradigm for assessing the security impact of various factors in a distributed consensus system.
Toward Low-Cost and Stable Blockchain Networks
Authors: Minghong Fang, Jia Liu
Abstract: Envisioned to be the future of distributed systems, blockchain networks have received increasing attentions from both industry and academic research in recent years. However, the blockchain mining process consumes vast amounts of energy, and studies have shown that the amount of energy consumed in Bitcoin mining is almost the same as electricity used in Ireland. To address the high mining energy cost problem of blockchain networks, in this paper, we propose a blockchain mining resources allocation algorithm to reduce the mining cost in PoW-based (proof-of-work-based) blockchain networks. We first provide a systematic study on general blockchain queueing model. In our queueing model, transactions arrive randomly to the queue and served in a batch manner with unknown probability distribution and agnostic to any priority mechanism. Then, we leverage Lyapunov optimization techniques to propose a dynamic mining resources allocation algorithm (DMRA), which is parameterized by a tuning parameter $K>0$. We show that our algorithm achieves performance-delay tradeoff as $[O(1/K), O(K)]$. The simulation results also demonstrate the effectiveness of DMRA in reducing the mining cost.
Bitcoin’s Blockchain Data Analytics: A Graph Theoretic Perspective
Authors: Aman Sharma, Ashutosh Bhatia
Abstract: Bitcoin is the most popular cryptocurrency used worldwide. It provides pseudonymity to its users by establishing identity using public keys as transaction end-points. These transactions are recorded on an immutable public ledger called Blockchain which is an append-only data structure. The popularity of Bitcoin has increased unreasonably. The general trend shows a positive response from the common masses indicating an increase in trust and privacy concerns which makes an interesting use case from the analysis point of view. Moreover, since the blockchain is publicly available and up-to-date, any analysis would provide a live insight into the usage patterns which ultimately would be useful for making a number of inferences by law-enforcement agencies, economists, tech-enthusiasts, etc. In this paper, we study various applications and techniques of performing data analytics over Bitcoin blockchain from a graph theoretic perspective. We also propose a framework for performing such data analytics and explored a couple of use cases using the proposed framework.
Profit from Two Bitcoin Mining Tactics: Towing and Shutdown
Authors: Ehsan Meamari, Chien-Chung Shen
Abstract: Since Bitcoin’s inception in 2008, it has became attractive investments for both trading and mining. To mine Bitcoins, a miner has to invest in computing power and pay for electricity to solve cryptographic puzzles for rewards, if it becomes the first to solve a puzzle, paid in Bitcoin. Given that mining is such a resource intensive effort, miners seek new strategies trying to make the mining process more profitable. One obvious strategy is to adopt faster and/or more energy-efficient com-pute hardware [1]. In addition, miners could launch attacks, such as Selfish [2] and Withholding [3],to earn more Bitcoins. In this article, we introduce two new tactics termed Shutdown and Towingand analyze their profitability of earning more Bitcoins. In the following, we first review a simplebackground, and then present the two tactics.
HushRelay: A Privacy-Preserving, Efficient, and Scalable Routing Algorithm for Off-Chain Payments
Authors: Subhra Mazumdar, Sushmita Ruj, Govind Ram Singh, Arindam Pal
Abstract: Payment channel networks (PCN) are used in cryptocurrencies to enhance the performance and scalability of off-chain transactions. Except for opening and closing of a payment channel, no other transaction requests accepted by a PCN are recorded in the Blockchain. Only the parties which have opened the channel will know the exact amount of fund left at a given instant. In real scenarios, there might not exist a single path which can enable transfer of high value payments. For such cases, splitting up the transaction value across multiple paths is a better approach. While there exists several approaches which route transactions via several paths, such techniques are quite inefficient, as the decision on the number of splits must be taken at the initial phase of the routing algorithm (e.g., SpeedyMurmur [42]). Algorithms which do not consider the residual capacity of each channel in the network are susceptible to failure. Other approaches leak sensitive information, and are quite computationally expensive [28]. To the best of our knowledge, our proposed scheme HushRelay is an efficient privacy preserving routing algorithm, taking into account the funds left in each channel, while splitting the transaction value across several paths. Comparing the performance of our algorithm with existing routing schemes on real instances (e.g., Ripple Network), we observed that HushRelay attains a success ratio of 1, with an execution time of 2.4 sec. However, SpeedyMurmur [42] attains a success ratio of 0.98 and takes 4.74 sec when the number of landmarks is 6. On testing our proposed routing algorithm on the Lightning Network, a success ratio of 0.99 is observed, having an execution time of 0.15 sec, which is 12 times smaller than the time taken by SpeedyMurmur.
Ant Routing scalability for the Lightning Network
Authors: Cyril Grunspan, Gabriel Lehéricy, Ricardo Pérez-Marco
Abstract: The ambition of the Lightning Network is to provide a second layer to the Bitcoin network to enable transactions confirmed instantly, securely and anonymously with a world scale capacity using a decentralized protocol. Some of the current propositions and implementations present some difficulties in anonymity, scaling and decentalization. The Ant Routing algorithm for the Lightning Network was proposed in \cite{GrunspanPerez} for maximal decentralization, anonymity and potential scaling. It solves several problems of current implementation, such as channel information update and centralization by beacon nodes. Ant Routing nodes play all the same role and don’t require any extra information on the network topology beside for their immediate neighbors. The goal of LN transactions are completed instantaneously and anonymously. We study the scaling of the Ant Routing protocol. We propose a precise implementation, with efficient memory management using AVL trees. We evaluate the efficiency of the algorithm and we estimate the memory usage of nodes by local node workload simulations. We prove that the number of transactions per second that Ant Routing can sustain is of the order of several thousands which is enough for a global payment network.
Local Bitcoin Network Simulator for Performance Evaluation using Lightweight Virtualization
Authors: Lina Alsahan, Noureddine Lasla, Mohamed Abdallah
Abstract: This paper presents a new blockchain network simulator that uses bitcoin’s original reference implementation as its main application. The proposed simulator leverages the use of lightweight virtualization technology to build a fine tuned local testing network. To enable fast simulation of a large scale network without disabling mining service, the simulator can adjust the bitcoin mining difficulty level to below the default minimum value. In order to assess the performance of blockchain under different network conditions, the simulator allows to define different network topologies, and integrates Linux kernel traffic control (tc) tool to apply distinct delay or packet loss on the network nodes. Moreover, to validate the efficiency of our simulator we conduct a set of experiments and study the impact of the computation power and network delay on the network’s consistency in terms of number of forks and mining revenues. The impact of applying different mining difficulty levels is also studied and the block time as well as fork occurrences are evaluated. Furthermore, a comprehensive survey and taxonomy of existing blockchain simulators are provided along with a discussion justifying the need of new simulator. As part of our contribution, we have made the simulator available on Github (https://github.com/noureddinel/core-bitcoin-net-simulator) for the community to use and improve it.
Blockchain-noncrypto uses
Attribute-based Multi-Signature and Encryption for EHR Management: A Blockchain-based Solution
Authors: Hao Guo, Wanxin Li, Ehsan Meamari, Chien-Chung Shen, Mark Nejad
Abstract: The global Electronic Health Record (EHR) market is growing dramatically and has already hit $31.5 billion in 2018. To safeguard the security of EHR data and privacy of patients, fine-grained information access and sharing mechanisms are essential for EHR management. This paper proposes a hybrid architecture of blockchain and edge nodes to facilitate EHR management. In this architecture, we utilize attribute-based multi-signature (ABMS) scheme to authenticate user’s signatures without revealing the sensitive information and multi-authority attribute-based encryption (ABE) scheme to encrypt EHR data which is stored on the edge node. We develop the blockchain module on Hyperledger Fabric platform and the ABMS module on Hyperledger Ursa library. We measure the signing and verifying time of the ABMS scheme under different settings, and experiment with the authentication events and access activities which are logged as transactions in blockchain.
Infnote: A Decentralized Information Sharing Platform Based on Blockchain
Authors: Haoqian Zhang, Yancheng Zhao, Abhishek Paryani, Ke Yi
Abstract: Internet censorship has been implemented in several countries to prevent citizens from accessing information and to suppress discussion of specific topics. This paper presents Infnote, a platform that helps eliminate the problem of sharing content in these censorship regimes. Infnote is a decentralized information sharing system based on blockchain and peer-to-peer network, aiming to provide an easy-to-use medium for users to share their thoughts, insights and views freely without worrying about data tampering and data loss. Infnote provides a solution that is able to work on any level of Internet censorship. Infnote uses multi-chains architecture to support various independent applications or different functions in an application.
Assuring Automotive Data and Software Integrity Employing Distributed Hash Tables and Blockchain
Authors: Gregory Falco, E. Joshua Siegel
Abstract: Automotive software is increasingly complex and critical to safe vehicle operation, and related embedded systems must remain up-to-date to ensure long-term system performance. Update mechanisms introduce opportunities for malicious actors to compromise these cyber-physical systems, and for trusted actors to accidentally install incompatible software versions. An automotive software and data provenance mechanism is proposed to assure users, service providers, and original equipment manufacturers (OEMs) of vehicular software integrity and reliability. The proposed approach employs the use of distributed hash tables (DHT) and a public blockchain to provide high assurance, scalability, and efficiency.
Ethereum
Financial and DeFi
An $\alpha$-Stable Approach to Modelling Highly Speculative Assets and Cryptocurrencies
Authors: Taurai Muvunza
Abstract: We investigate the behaviour of cryptocurrencies’ return data. Using return data for bitcoin, ethereum and ripple which account for over 70% of the cyrptocurrency market, we demonstrate that $α$-stable distribution models highly speculative cryptocurrencies more robustly compared to other heavy tailed distributions that are used in financial econometrics. We find that the Maximum Likelihood Method proposed by DuMouchel (1971) produces estimates that fit the cryptocurrency return data much better than the quantile based approach of McCulloch (1986) and sample characteristic method by Koutrouvelis (1980). The empirical results show that the leptokurtic feature presented in cryptocurrencies’ return data can be captured by an $α$-stable distribution. This papers covers predominant literature in cryptocurrencies and stable distributions.
Criptocurrencies, Fiat Money, Blockchains and Databases
Authors: Jorge Barrera
Abstract: Two taxonomies of money that include cryptocurrencies are analyzed. A definition of the term cryptocurrency is given and a taxonomy of them is presented, based on how its price is fixed. The characteristics of the use of current fiat money and the operation of two-level banking systems are discussed. Cryptocurrencies are compared with fiat money and the aspects in which the latter cannot be overcome are indicated. The characteristics of blockchains and databases are described. The possible cases of use of both technologies are compared, and it is noted that blockchains, in addition to cryptocurrencies and certain records, have not yet shown their usefulness, while databases constitute the foundation of most of the automated systems in operation.
The Decentralized Financial Crisis: Attacking DeFi
Authors: Lewis Gudgeon, Daniel Perez, Dominik Harz, Arthur Gervais, Benjamin Livshits
Abstract: The Global Financial Crisis of 2008, caused by excessive financial risk, inspired Nakamoto to create Bitcoin. Now, more than ten years later, Decentralized Finance (DeFi), a peer-to-peer financial paradigm which leverages blockchain-based smart contracts to ensure its integrity and security, contains over 1bn USD of capital as of February 2020. Yet as this ecosystem develops, with protocols intertwining and the complexity of financial products increasing, it is at risk of the very sort of financial meltdown it is supposed to be preventing. In this paper we explore how design weaknesses in DeFi protocols could lead to a DeFi crisis. First, overcollateralized DeFi protocols are vulnerable to exogenous price shocks. We quantify the robustness of DeFi lending protocols in the presence of significant falls in the value of the assets these protocols are based on, showing for a range of parameters the speed at which a DeFi protocol would become undercollateralized. Second, we present a governance attack on Maker – the largest DeFi protocol by market share – that allows an attacker to steal all 0.5bn USD worth of collateral. Moreover, we present a novel strategy that would allow an attacker to steal the Maker collateral within just two transactions and without the need to lock any tokens. This paper shows that with the composition of collateralized debt in these DeFi protocols, the failure of one protocol may lead to financial contagion, resulting in losses ranging from 145m USD to in excess of 246m USD.
Pricing Bitcoin Derivatives under Jump-Diffusion Models
Authors: Pablo Olivares
Abstract: In recent years cryptocurrency trading has captured the attention of practitioners and academics. The volume of the exchange with standard currencies has known a dramatic increasing of late. This paper addresses to the need of models describing a bitcoin-US dollar exchange dynamic and their use to evaluate European option having bitcoin as underlying asset.
Internet of Things (IoT)
Mathematical
Mining
Proof of Work (PoW) alternatives
Blockchain using Proof-of-Interaction
Authors: Jean-Philippe Abegg, Quentin Bramas, Thomas Noel
Abstract: This paper we define a new Puzzle called Proof-of-Interaction and we show how it can replace, in the Bitcoin protocol, the Proof-of-Work algorithm.
Characterizing EOSIO Blockchain
Authors: Yuheng Huang, Haoyu Wang, Lei Wu, Gareth Tyson, Xiapu Luo, Run Zhang, Xuanzhe Liu, Gang Huang, Xuxian Jiang
Abstract: EOSIO has become one of the most popular blockchain platforms since its mainnet launch in June 2018. In contrast to the traditional PoW-based systems (e.g., Bitcoin and Ethereum), which are limited by low throughput, EOSIO is the first high throughput Delegated Proof of Stake system that has been widely adopted by many applications. Although EOSIO has millions of accounts and billions of transactions, little is known about its ecosystem, especially related to security and fraud. In this paper, we perform a large-scale measurement study of the EOSIO blockchain and its associated DApps. We gather a large-scale dataset of EOSIO and characterize activities including money transfers, account creation and contract invocation. Using our insights, we then develop techniques to automatically detect bots and fraudulent activity. We discover thousands of bot accounts (over 30\% of the accounts in the platform) and a number of real-world attacks (301 attack accounts). By the time of our study, 80 attack accounts we identified have been confirmed by DApp teams, causing 828,824 EOS tokens losses (roughly 2.6 million US\$) in total.
Zendoo: a zk-SNARK Verifiable Cross-Chain Transfer Protocol Enabling Decoupled and Decentralized Sidechains
Authors: Alberto Garoffolo, Dmytro Kaidalov, Roman Oliynykov
Abstract: Sidechains are an appealing innovation devised to enable blockchain scalability and extensibility. The basic idea is simple yet powerful: construct a parallel chain — sidechain — with desired features, and provide a way to transfer coins between the mainchain and the sidechain. In this paper, we introduce Zendoo, a construction for Bitcoin-like blockchain systems that allows the creation and communication with sidechains of different types without knowing their internal structure. We consider a parent-child relationship between the mainchain and sidechains, where sidechain nodes directly observe the mainchain while mainchain nodes only observe cryptographically authenticated certificates from sidechain maintainers. We use zk-SNARKs to construct a universal verifiable transfer mechanism that is used by sidechains. Moreover, we propose a specific sidechain construction, named Latus, that can be built on top of this infrastructure, and realizes a decentralized verifiable blockchain system for payments. We leverage the use of recursive composition of zk-SNARKs to generate succinct proofs of sidechain state progression that are used to generate certificates’ validity proofs. This allows the mainchain to efficiently verify all operations performed in the sidechain without knowing any details about those operations.
Comparison of Decentralization in DPoS and PoW Blockchains
Authors: Chao Li, Balaji Palanisamy
Abstract: Decentralization is a key indicator for the evaluation of public blockchains. While existing works have evaluated the degree of decentralization in Proof-of-Work (PoW) blockchains represented by Bitcoin and Ethereum, there have been few studies on measuring the actual level of decentralization between PoW blockchains and blockchains powered by other decentralized consensus protocols. This paper presents a comparison study of the level of decentralization in Bitcoin and Steem, a leading Delegated-Proof-of-Stake (DPoS) blockchain. In Bitcoin, miners with higher computational power generate more blocks. In contrast, blocks in Steem are equally generated by witnesses while witnesses are periodically elected by stakeholders. Our study analyzes the process of stake-weighted election of witnesses in the DPoS consensus protocol and measures the actual stake invested by each stakeholder in Steem. We then quantify and compare the actual degree of decentralization in these two blockchains by computing the Shannon entropy of the distribution of computational power among miners in Bitcoin and the distribution of invested stake among stakeholders in Steem. Our measurements indicate that, compared with Steem, Bitcoin tends to be more decentralized among top miners but less decentralized in general. Our study is designed to provide insights into the current state of the degree of decentralization in representative DPoS and PoW blockchains. We believe that the methodologies and findings in this paper can facilitate future studies of decentralization in other blockchain systems employing different consensus protocols.
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