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Financial Cryptography 2020 Recap – Security Boulevard

A few weeks ago, we went to the 24th Financial Cryptography (FC) conference and the Workshop on Trusted Smart Contracts (WTSC) workshop, where we presented our work on smart contract bug categorization (see our executive summary), and a poster on Echidna. Although FC is not a blockchain conference, it featured several blockchain-oriented presentations this year and in previous years. And despite issues stemming from world-traveling restrictions, the organizers pulled off an excellent conference for 2020.

Here are some of the conference papers we recommend checking out:


Security Analysis on dBFT Protocol of NEO

Qin Wang, Jiangshan Yu, Zhiniang Peng, Van Cuong Bui, Shiping Chen, Yong Ding, and Yang Xiang

In this review of the NEO blockchain’s consensus protocol, dBFT (a variant of the standard PBFT), the authors discovered two successful safety attacks which occurred mostly because dBFT skipped a specific message (COMMIT) for optimization reasons. We’ve reviewed similar consensus protocols at Trail of Bits, and we enjoyed learning about the attacks found here.

Breaking the Encryption Scheme of the Moscow Internet Voting System

Pierrick Gaudry and Alexander Golovnev

We’ve reviewed several on-chain election systems, so this system’s vulnerabilities were no surprise to us. In this study, the encryption of an on-chain voting system in a recent Moscow election used a variant of ElGamal called 3 ElGamal, which is a multi-level encryption version of ElGamal. It is not clear why the developers created this variant, since it does not increase security. They used 256-bit keys, which (as you might expect) are too small; However, the paper’s authors believe 256-bit keys were used because they match the size of EVM operands and allowed a simple on-chain implementation of the encryption. The issue was reported a few weeks before the election, so the developers rewrote most of the codebase and removed the on-chain encryption just before the election. The authors then found another issue that caused a leak of one bit of information—enough to identify a voter’s choice of candidate. Not surprisingly, this paper had significant press coverage (Coindesk, ZDnet, etc.).

LockDown: Balance Availability Attack Against Lightning Network Channels

Cristina Pérez-Solà, Alejandro Ranchal-Pedrosa, Jordi Herrera-Joancomartí, Guillermo Navarro-Arribas, and Joaquin Garcia-Alfaro

In this paper, the authors showed that it is possible to trigger a balance lockdown on the bitcoin lightning network. Essentially, an attacker can reach a dominant position over its target in the network such that it becomes the main gateway of the route payment. Interestingly enough, payment channels allow loops in their path, increasing the fee for the attacker.

Selfish Mining Re-examined

Kevin Alarcón Negy, Peter Rizun, and Emin Gün Sirer

At a high level, selfish mining occurs when a miner does not reveal that a block has been mined. Knowing the block has been mined, the selfish miner can work on the next one and thereby gain an edge over the competition. Selfish mining is a known concept in blockchain, but part of the community believes the reasoning is flawed and the attack is not profitable.

This paper introduces a variant in which a miner switches between selfish mining and standard mining, and shows how a miner would profit from such behavior. They looked at the difficulty adjustment algorithms, and found that some blockchains seem more vulnerable than others. Typically, Ethereum’s uncle reward—in which miners receive a small reward if competitive blocks are mined (i.e., when two miners find a different block at the same time)—seems to make Ethereum more vulnerable.

Program analysis

Marlowe: Implementing and Analysing Financial Contracts on Blockchain

Pablo Lamela Seijas, Alexander Nemish, David Smith, and Simon Thompson

Marlowe is a Haskel-based DSL meant to represent financial contracts on the Cardano blockchain. The DSL is not Turing-complete, but aims to provide all the features necessary for the most common financial contracts. It is a nice work in progress; check it out their web-based IDE.

Enforcing Determinism of Java Smart Contracts

Fausto Spoto

This work focuses on the Takamaka blockchain, which allows smart contracts to be written in Java and executed in a Java virtual machine. One of the main issues with Java is keeping deterministic execution, while some standard libraries are not deterministic (e.g., HashSet). This work-in-progress uses a whitelist approach of known deterministic libraries, and statically detects when a function call is dangerous; it then adds dynamic instrumentation and reverts the contract if non-deterministic behavior is detected.

Albert, an Intermediate Smart-Contract Language for the Tezos Blockchain

Bruno Bernardo, Raphaël Cauderlier, Basile Pesin, and Julien Tesson

Albert is an intermediate representation for the Tezos blockchain. Its compiler to Michelson, the language executed on Tezos, was written and verified in Coq. It is nice work in progress, and we were happy to see compiler verification applied to smart contract language.

A Formally Verified Static Analysis Framework for Compositional Contracts

Fritz Henglein, Christian Kjær Larsen, and Agata Murawska

This work presents an abstract interpretation framework based on the Contract Specification Language (CSL). The work is interesting, but unfortunately, CSL has not yet found much real-world usage.

Protocol design

Load Balancing in Sharded Blockchains

Naoya Okanami, Ryuya Nakamura, and Takashi Nishide

This paper focused on the sharding repartition for Eth 2.0. With Eth 2.0, smart contracts will be split between shards, and then one must determine which contract is in what shard. It’s a hot topic, with many different approaches. For example, Eth 2.0 might end with a “Yank” opcode, allowing a contract to switch between shards. This work proposes a load-balancing approach, where off-chain competitors submit different repartitions and earn a reward if their solution is picked.

Fairness and Efficiency in DAG-Based Cryptocurrencies

Georgios Birmpas, Elias Koutsoupias, Philip Lazos, and Francisco J. Marmolejo-Cossío

DAG-based public ledgers are an alternative to blockchain. Instead of storing the history of the chain in a linear data structure, some teams try to use a DAG (directed acyclic graph). DAG-based ledgers are supposed to scale significantly better than blockchain, but they create a difficult architecture to synchronize. This paper proposed a scenario in which there is no malicious miner, and showed that even in this situation, the synchronization is difficult and depends heavily on miner connectivity.

Decentralized Privacy-Preserving Netting Protocol on Blockchain for Payment Systems

Shengjiao Cao, Yuan Yuan, Angelo De Caro, Karthik Nandakumar, Kaoutar Elkhiyaoui, and Yanyan Hu

Done in collaboration with IBM, this work used zk-proof to create a decentralized netting and allow banks to settle their balances. See the code.

MicroCash: Practical Concurrent Processing of Micropayments

Ghada Almashaqbeh, Allison Bishop, and Justin Cappos

In this paper, the authors created a micro-payment solution that handles parallel payments. Most existing micro-payment solutions require sequential payment, which limits their usage. The author extended the existing probabilistic micropayment schema. One limitation is that the system requires a relatively stable set of merchants, but it is likely to match most real-world situations.

Ride the Lightning: The Game Theory of Payment Channels

Zeta Avarikioti, Lioba Heimbach, Yuyi Wang, and Roger Wattenhofer

Here, the authors use a game theory approach for economic modeling of payment channels. They used graph-based metrics (betweenness and closeness centrality) and aimed to minimize the user’s cost (channels’ creation cost) while maximizing fees. It is an interesting approach. Some assumptions are not realistic (e.g., it assumes that all the nodes are static), but their approach shows that there are improvements to be made in the nodes’ strategies for their payment channel position.

How to Profit From Payment Channels

Oğuzhan Ersoy, Stefanie Roos, and Zekeriya Erkin

When the authors looked at the fee chosen by the nodes in a payment channel, most of the nodes seemed to use the default value. This work formalizes the optimization problem of having the optimal fee for a node, and shows that the problem is NP-hard. It then proposes a greedy algorithm to find an approximation to the optimal solution. Here they assume that other nodes keep a fee constant, which is realistic for now, but might change if nodes start using more efficient fee strategies.

High-level studies

Surviving the Cryptojungle: Perception and Management of Risk Among North American Cryptocurrency (Non)Users

Artemij Voskobojnikov, Borke Obada-Obieh, Yue Huang, and Konstantin Beznosov

This is a user study on the perception and management of the risks associated with cryptocurrency. It is an interesting work focusing on cryptocurrency in general, not just bitcoin. As expected, the authors found that many users struggle with the user-interface of wallet and blockchain applications, and several users studied are afraid of using cryptocurrency and are waiting for more regulations.

Characterizing Types of Smart Contracts in the Ethereum Landscape

Monika di Angelo and Gernot Salzer

This study focuses on classifying activity on the Ethereum mainet. It confirms some known results: A lot of code is duplicated and/or unused. The paper also shows that GasTokens are responsible for a significant percentage of transactions. Such a classification is needed to better understand the different trends and usages of blockchain.

Smart Contract Development From the Perspective of Developers: Topics and Issues Discussed on Social Media.

Afiya Ayman, Shanto Roy, Amin Alipour, and Aron Laszka

This paper took an interesting approach to security questions and tool citation by showing which tools are cited most often in Stack Exchange and Medium. It would be interesting to apply this approach to other media (Reddit, Twitter), and look at the software quality of the tools. For example, Oyente is frequently cited, but the tool has not been updated since 2018 and is no longer usable.

Systematization of knowledge

SoK: A Classification Framework for Stablecoin Designs

Amani Moin, Kevin Sekniqi, and Emin Gun Sirer

This work classifies the different stablecoins and will be a useful reference. We were interested in this work since we reviewed many of the stablecoins cited.

SoK: Layer-Two Blockchain Protocols

Lewis Gudgeon, Pedro Moreno-Sanchez, Stefanie Roos, Patrick McCorry, and Arthur Gervai

The paper summarizes different layer-two solutions, and will be a useful reference for anyone working on this topic.

Secure computation

Communication-Efficient (Client-Aided) Secure Two-Party Protocols and Its Application

Satsuya Ohata and Koji Nuida

This paper focused on MPCs based on shared-secret (SS), which are faster than traditional garbled circuits. The main issue with most SS-based MPCs is the number of communication rounds required, which creates significant network latency. This makes MPCs impractical to deploy on a WAN setup, which seems to be an anti-goal for MPC. The authors focus on reducing the number of communication rounds so SS-based MPC can be deployed on WAN.

Insured MPC: Efficient Secure Computation with Financial Penalties

Carsten Baum, Bernardo David, and Rafael Dowsley

In this presentation on the security properties of MPC, the authors explain that traditional works focus mostly on the correctness and privacy of MPC, but some properties are missing. The security of an MPC also relies on fairness (if an adversary gets output, everybody does), identifiable abort (if an adversary aborts, every party knows who caused it), and public verification (any third party can verify that the output was correctly computed). As a result, the authors propose the construction of a publicly verifiable homomorphic commitment scheme with composability guarantees.

Secure Computation of the kth-Ranked Element in a Star Network

Anselme Tueno, Florian Kerschbaum, Stefan Katzenbeisser, Yordan Boev, and Mubashir Qureshi

Here the authors propose a protocol to find the kth-ranked element when multiple parties hold private integers (e.g., comparing employee salaries without revealing the salaries). The main idea is to use a server in a secure multiparty computation (SMC); the server is meant to help the protocol without having access to private information.


Zether: Towards Privacy in a Smart Contract World

Benedikt Bünz, Shashank Agrawal2, Mahdi Zamani2, and Dan Boneh

Zether leverages zk-proofs to allow private fund transfers. It is a hot topic; we previously worked on Aztec, which proposes a similar solution. While the bulletproof library is open-source, the smart contract seems to be closed-source.

BLAZE: Practical Lattice-Based Blind Signatures for Privacy-Preserving Applications

Nabil Alkeilani Alkadri, Rachid El Bansarkhani, and Johannes Buchmann

This paper proposes a post-quantum blind signature schema. Blaze aims to improve two current limitations of the existing schema, i.e., they are either too slow or their signatures are too large.

Submit your research to our Crytic Research Prize!

FC is one of the peer-reviewed conferences recommended in our Crytic $10k cash prize. If you are working on program analysis for smart contracts, try any of our open-source tools (including Slither, Echidna, Manticore) and submit your work for our Crytic prize! We are happy to provide technical support to anyone using our tools for academic research—just contact us.

*** This is a Security Bloggers Network syndicated blog from Trail of Bits Blog authored by josselinfeist. Read the original post at: https://blog.trailofbits.com/2020/03/18/financial-cryptography-2020-recap/

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