Research Pulse #77 08/08/2022

  1. When is a DAO Decentralized?
    Authors: Henrik Axelsen, Johannes Rude Jensen, and Omri Ross

While previously a nascent theoretical construct, decentralized autonomous organizations (DAO) have grown rapidly in recent years. DAOs typically emerge around the management of decentralized financial applications (DeFi) and thus benefit from the rapid growth of innovation in this sector. In response, global regulators increasingly voice the intent to regulate these activities. This may impose an excessive compliance burden on DAOs, unless they are deemed sufficiently decentralized to be regulated. Yet, decentralization is an abstract concept with scarce legal precedence. We investigate dimensions of decentralization through thematic analysis, combining extant literature with a series of expert interviews. We propose a definition of “sufficient decentralization” and present a general framework for the assessment of decentralization. We derive five dimensions for the assessment of decentralization in DAOs: Token-weighted voting, Infrastructure, Governance, Escalation and Reputation (TIGER). We present a discretionary sample application of the framework and five propositions on the future regulation and supervision of DAOs. We contribute new practical insights on the topic of compliance and decentralized organizations to the growing discourse on the application of blockchain technology in information systems (IS) and management disciplines.

Link to Paper (CSIMQ)

  • Decentralized Autonomous Organizations (DAOs) are a fascinating new approach to human-machine coordination. However, as a nascent area, there aren’t mature evaluation frameworks to understand how decentralized a DAO is.
  • This paper proposes a complete framework to reason about DAOs and specifically looks at decentralization assessments.
  • Five dimensions are evaluated in this framework, namely: Token-weighted voting, Infrastructure, Governance, Escalation and Reputation.
  1. Declarative Smart Contracts
    Authors: Haoxian Chen, Gerald Whitters, Mohammad Javad Amiri, Yuepeng Wang, and Boon Thau Loo

This paper presents DeCon, a declarative programming language for implementing smart contracts and specifying contract-level properties. Driven by the observation that smart contract operations and contract-level properties can be naturally expressed as relational constraints, DeCon models each smart contract as a set of relational tables that store transaction records. This relational representation of smart contracts enables convenient specification of contract properties, facilitates run-time monitoring of potential property violations, and brings clarity to contract debugging via data provenance. Specifically, a DeCon program consists of a set of declarative rules and violation query rules over the relational representation, describing the smart contract implementation and contract-level properties, respectively. We have developed a tool that can compile DeCon programs into executable Solidity programs, with instrumentation for run-time property monitoring. Our case studies demonstrate that DeCon can implement realistic smart contracts such as ERC20 and ERC721 digital tokens. Our evaluation results reveal the marginal overhead of DeCon compared to the open-source reference implementation, incurring 14% median gas overhead for execution, and another 16% median gas overhead for run-time verification.

Link to Paper (Arxiv)

  • Multiple approaches to the development of smart contracts have been proposed over the years, but the ecosystem has converged upon the Solidity smart contract programming language.
  • This paper provides an alternative development paradigm that represents smart contract code as relational constraints. Dubbed DeCon, this construct is intended to enable developers to better reason about the contract’s security.
  • DeCon features tooling that compiles its code to Solidity and the authors provide interesting benchmarks on its impact on gas consumption.
  1. Ethereum’s Peer-to-Peer Network Monitoring and Sybil Attack Prevention
    Authors: Jean-Philippe Eisenbarth, Thibault Cholez, and Olivier Perrin

Public blockchains, like Ethereum, rely on an underlying peer-to-peer (P2P) network to disseminate transactions and blocks between nodes. With the rise of blockchain applications and cryptocurrencies values, they have become critical infrastructures which still lack comprehensive studies. In this paper, we propose to investigate the reliability of the Ethereum P2P network. We developed our own dependable crawler to collect information about the peers composing the network. Our data analysis regarding the geographical distribution of peers and the churn rate shows good network properties while the network can exhibit a sudden and major increase in size and peers are highly concentrated on a few ASes. In a second time, we investigate suspicious patterns that can denote a Sybil attack. We find that many nodes hold numerous identities in the network and could become a threat. To mitigate future Sybil attacks, we propose an architecture to detect suspicious nodes and revoke them. It is based on a monitoring system, a smart contract to propagate the information and an external revocation tool to help clients remove their connections to suspicious peers. Our experiment on Ethereum’s Test network proved that our solution is effective.

Link to Paper (Springer Link)

  • P2P network analysis is crucial when evaluating the privacy, security, and decentralization of distributed networks such as Ethereum.
  • This paper presents a complete schema to analyze the relationship of nodes in the Ethereum P2P network.
  • The authors then use this schema to derive interesting insights, such as the susceptibility of Sybil attacks, and how node client teams can leverage this work to improve peer selection algorithms.
  1. Enabling Blockchain Services for IoE with Zk-Rollups
    Authors: Thomas Lavaur, JĂ©rĂ´me Lacan, and Caroline Ponzoni Carvalho Chanel

Internet of Things includes all connected objects from small embedded systems with low computational power and storage capacities to efficient ones, as well as moving objects like drones and autonomous vehicles. The concept of Internet of Everything expands upon this idea by adding people, data and processing. The adoption of such systems is exploding and becoming ever more significant, bringing with it questions related to the security and the privacy of these objects. A natural solution to data integrity, confidentiality and single point of failure vulnerability is the use of blockchains. Blockchains can be used as an immutable data layer for storing information, avoiding single point of failure vulnerability via decentralization and providing strong security and cryptographic tools for IoE. However, the adoption of blockchain technology in such heterogeneous systems, containing light devices, presents several challenges and practical issues that need to be overcome. Indeed, most of the solutions proposed to adapt blockchains to devices with low resources confront difficulty in maintaining decentralization or security. The most interesting are probably the Layer 2 solutions which build offchain systems strongly connected to the blockchain. Among these, zk-rollup is a promising new generation of Layer 2/off-chain schemes which can remove the last obstacles to blockchain adoption in IoT, or more generally, in IoE. Despite their promises illustrated by recent systems proposed by startups and private companies, very few scientific publications explaining or applying this barely-known technology have been published, especially for non-financial systems. In this context, the objective of our paper is to fill this gap for IoE systems in two steps. We first propose a synthetic review of recent proposals to improve scalability including onchain (consensus, blockchain organization, …) and offchain (sidechain, rollups) solutions and we demonstrate that zk-rollups are the most promising ones. In a second step, we focus on IoE by describing several interesting features (scalability, dynamicity, data management, …) that are illustrated with various general IoE use cases.

Link to Paper (Preprints)

  • Much has been written about the intersection of IoT and Blockchains. Unfortunately, the focus tends to be on theoretical applications instead of critical infrastructural primitives, such as privacy-preserving techniques.
  • This paper evaluates the use of zk-rollup solutions for the implementation of IoT applications, which could bring strong privacy and scalability assurances to this field.
  1. Analysis of Polkadot: Architecture, Internals, and Contradictions
    Authors: Hanaa Abbas, Maurantonio Caprolu, and Roberto Di Pietro

Polkadot is a network protocol launched in 2020 with the ambition of unlocking the full potential of blockchain technologies. Its novel multi-chain protocol allows arbitrary data to be transferred across heterogeneous blockchains, enabling the implementation of a wide range of novel use cases. The Polkadot architecture is based on the principles of sharding, which promises to solve scalability and interoperability shortcomings that encumber many existing blockchain-based systems. Lured by these impressive features, investors immediately appreciated the Polkadot project, which is now firmly ranked among the top 10 cryptocurrencies by capitalization (around 20 Billions USD). However, Polkadot has not received the same level of attention from academia that other proposals in the crypto domain have received so far, like Bitcoin, Ethereum, and Algorand, to cite a few. Polkadot architecture is described and discussed only in the grey literature, and very little is known about its internals. In this paper, we provide the first systematic study on the Polkadot environment, detailing its protocols, governance, and economic model. Then, we identify several limitations—supported by an empirical analysis of its ledger—that could severely affect the scalability and overall security of the network. Finally, based on our analysis, we provide future directions to inspire researchers to investigate further the Polkadot ecosystem and its pitfalls in terms of performance, security, and network aspects.

Link to Paper (Arxiv)

  • Polkadot has been pursuing the creation of sharded applications as its main scalability strategy. For context, sharding involves splitting up a large monolithic database (in this case a blockchain) into many different partitions that can be processed in parallel.
  • With Ethereum’s Merge in the short horizon, it can be helpful to evaluate how sharded applications have performed in Polkadot.
  • This paper provides a complete overview of the Polkadot architecture and details its protocols, governance, and economic model.