Research Pulse #91 11/15/2022

  1. Ethereum Proof-of-Stake under Scrutiny
    Authors: Ulysse Pavloff, Yackolley Amoussou-Guenou, and Sara Tucci-Piergiovanni

Ethereum has undergone a recent change called the Merge, which made Ethereum a Proof-of-Stake blockchain shifting closer to BFT consensus. Ethereum, which wished to keep the best of the two protocols designs (BFT and Nakomoto-style), now has an involved consensus protocol as its core. The result is a blockchain being possibly produced in a tree-like form while participants try to finalize blocks. Several attacks jeopardizing liveness have been found in this new setting. The Ethereum community has responded by creating a patch. We discovered a new attack on the patched protocol. To support our analysis, we propose a new formalization of the properties of liveness and availability of the Ethereum blockchain, and we provide a pseudo-code. We believe this formalization to be helpful for other analyses as well. Our results yield that the Ethereum Proof-of-Stake has probabilistic liveness, influenced by the parameter describing the time frame allowed for validators to change their mind about the current main chain.

Link to Paper

  • Ethereum’s transition to Proof-of-Stake was a massive engineering feat widely celebrated within the crypto community.

  • Nevertheless, as with any nascent distributed system, there are novel attacks that have emerged with The Merge, especially related to liveness, which is a core property blockchains must retain.

  • We have covered nascent PoS attack types on the forum, notably Rebalancing Attacks. This paper introduces a new type of attack called a Bouncing attack, which is a form of liveness attack that can impact Ethereum’s uptime if exploited on-chain.

  1. Optimistic and Validity Rollups: Analysis and Comparison between Optimism and StarkNet
    Author: Luca Donno

Rollups are the most promising solution available today to solve the scalability problem in decentralized blockchains, ushering in the era of modular blockchains as opposed to monolithic blockchains.
The choice of developing an Optimistic Rollup or a Validity Rollup is mainly shown as a trade-off between complexity and agility. StarkNet has numerous advantages such as potentially instantaneous withdrawal speed, structural inability to have invalid state transitions, recursion and lower transaction cost at the expense of a longer development period and incompatibility with EVM, where instead Optimism leveraged the network economy to quickly gain a major share of the market.
Optimism Bedrock, however, possesses a modular design that allows it to become a Validity Rollup in the future: Cannon currently uses minigeth compiled to MIPS for invalidity proof contention, but the same architecture can be used to obtain a circuit and produce validity proofs. Compiling a complex machine such as the EVM for a microarchitecture results in a simpler circuit that does not need to be modified and reverified in case of upgrades. RISC Zero is a verifiable microarchitecture with STARK proofs already in development based on RISC-V that can be used for this purpose as an alternative to MIPS [77].
One aspect that should not be underestimated is the complexity in understanding how the technology works. A strength of traditional blockchains is being able to verify the state of the blockchain without trusting any third party entity, but in the case of StarkNet even if you use your own node you have to trust the implementation if you are unable to verify the various components based on cryptography and advanced mathematics. This may initially create friction for the adoption of the technology, but as the tools and adoption of integrity proofs advance even outside the blockchain field this problem will be hopefully solved.

Link to Paper

  • Rollups have become critical for the scalability of public blockchains, but their architecture and implementation vary widely.

  • This paper does a great job of providing the conceptual building blocks of the two most popular rollup types: zero-knowledge rollups and optimistic rollups.

  • Beyond just the theoretical backbone of these rollup types, the author also discusses the two most popular implementations of each rollup type- STARKNET and Optimism.

  1. Robust clustering of ethereum transactions using time leakage from fixed nodes
    Authors: Congcong Yu, Chen Yang, Zheng Che, and Liehuang Zhu

Ethereum has received increasing attention as the first blockchain platform to support smart contracts. Data mining has become an important tool for analyzing Ethereum transactions. However, existing methods have the disadvantage of covering partial transactions and being vulnerable to privacy-enhancing techniques. In this paper, we propose a scheme for transaction correlation with the node as an entity, which can cover all transactions while being resistant to privacy-enhancing techniques. Utilizing timestamps relayed from N fixed nodes to describe the network properties of transactions, we cluster transactions that enter the network from the same source node. Experimental results show that our method can determine with 97% precision whether two transactions enter the network from the same source node.

Link to Paper

  • Address clustering has become a popular practice amongst crypto data enthusiasts because it enables a real-world entity, such as a crypto exchange, to be associated with a set of addresses on-chain.

  • In turn, this enables on-chain observers to have a better understanding of the activities that these entities are engaging in, which can be useful in due-dilligence and market sentiment analysis.

  • This paper discusses a new way to cluster addresses associated with an entity via a network-level privacy attack at the node level.

  1. SoK: Not Quite Water Under the Bridge: Review of Cross-Chain Bridge Hacks
    Authors: Sung-Shine Lee, Alexandr Murashkin, Martin Derka, and Jan Gorzny

The blockchain ecosystem has evolved into a multi-chain world with various blockchains vying for use. Although each blockchain may have its own native cryptocurrency or digital assets, there are use cases to transfer these assets between blockchains. Systems that bring these digital assets across blockchains are called bridges, and have become important parts of the ecosystem. The designs of bridges vary and range from quite primitive to extremely complex. However, they typically consist of smart contracts holding and releasing digital assets, as well as nodes that help facilitate user interactions between chains. In this paper, we first provide a high level breakdown of components in a bridge and the different processes for some bridge designs. In doing this, we identify risks associated with bridge components. Then we analyse past exploits in the blockchain ecosystem that specifically targeted bridges.

Link to Paper

  • Cross-chain bridges have faced severe security issues over the past year, and bridge hacks are amongst the largest in the history of cryptoassets.

  • This paper provides interesting conceptual background on cross-chain bridges and describes how they are typically constructed.

  • The paper also sheds like on notable bridge hacks, such as the PolyNetwork hack, and discusses the challenges associated with securing cross-chain bridges.