Abstract We establish that cryptocurrency returns are driven and can be predicted by factors that are specific to cryptocurrency markets. Cryptocurrency returns are exposed to cryptocurrency network factors but not cryptocurrency production factors. We construct the network factors to capture the user adoption of cryptocurrencies and the production factors to proxy for the costs of cryptocurrency production. Moreover, there is a strong time-series momentum effect, and proxies for investor attention strongly forecast future cryptocurrency returns.
Blockchain-based distributed computing platforms enable the trusted execution of computation - defined in the form of smart contracts - without trusted agents. Smart contracts are envisioned to have a variety of applications, ranging from financial to IoT asset tracking. Unfortunately, the development of smart contracts has proven to be extremely error prone. In practice, contracts are riddled with security vulnerabilities comprising a critical issue since bugs are by design non-fixable and contracts may handle financial assets of significant value. To facilitate the development of secure smart contracts, we have created the FSolidM framework, which allows developers to define contracts as finite state machines (FSMs) with rigorous and clear semantics. FSolidM provides an easy-to-use graphical editor for specifying FSMs, a code generator for creating Ethereum smart contracts, and a set of plugins that developers may add to their FSMs to enhance security and functionality.
Alex Biryukov, Dmitry Khovratovich, Sergei Tikhomirov
Identity is a fundamental concept for the financial industry. In order to comply with regulation, financial institutions must verify the identity of their customers. Identities are currently handled in a centralized way, which diminishes users' control over their personal information and threats their privacy. Blockchain systems, especially those with support for smart contracts (e.g., Ethereum), are expected to serve as a basis of more decentralized systems for digital identity management. We propose a design of a privacy-preserving KYC scheme on top of Ethereum. It would let providers of financial services leverage the potential of blockchain technology to increase effciency of customer onboarding while complying with regulation and protecting users' privacy.
Elvira Albert, Pablo Gordillo, Benjamin Livshits, Albert Rubio Β· 5 authors
Analyzing Ethereum bytecode, rather than the source code from which it was generated, is a necessity when: (1) the source code is not available (e.g., the blockchain only stores the bytecode), (2) the information to be gathered in the analysis is only visible at the level of bytecode (e.g., gas consumption is specified at the level of EVM instructions), (3) the analysis results may be affected by optimizations performed by the compiler (thus the analysis should be done ideally after compilation). This paper presents EthIR, a framework for analyzing Ethereum bytecode, which relies on (an extension of) OYENTE, a tool that generates CFGs; EthIR produces from the CFGs, a rule-based representation (RBR) of the bytecode that enables the application of (existing) high-level analyses to infer properties of EVM code.
Ilya Grishchenko, Matteo Maffei, Clara Schneidewind
The recent growth of the blockchain technology market puts its main cryptocurrencies in the spotlight. Among them, Ethereum stands out due to its virtual machine (EVM) supporting smart contracts, i.e., distributed programs that control the flow of the digital currency Ether. Being written in a Turing complete language, Ethereum smart contracts allow for expressing a broad spectrum of financial applications. The price for this expressiveness, however, is a significant semantic complexity, which increases the risk of programming errors. Recent attacks exploiting bugs in smart contract implementations call for the design of formal verification techniques for smart contracts. This, however, requires rigorous semantic foundations, a formal characterization of the expected security properties, and dedicated abstraction techniques tailored to the specific EVM semantics. This work will overview the state-of-the-art in smart contract verification, covering formal semantics, security definitions, and verification tools. We will then focus on EtherTrust [ 1 ], a framework for the static analysis of Ethereum smart contracts which includes the first complete small-step semantics of EVM bytecode, the first formal characterization of a large class of security properties for smart contracts, and the first static analysis for EVM bytecode that comes with a proof of soundness.
There are several distributed ledger protocols potentially suitable for the Internet of things (IoT), including the Ethereum, Hyperledger Fabric and IOTA. This paper briefly presents and compares them from the IoT application development perspective. The IoT applications based on blockchain (BC) can incorporate the on-chain logic βthe smart contractsβ and Web, mobile or embedded client front-end application parts. We present three possible architectures for the IoT front-end BC applications. They differ in positioning of Ethereum blockchain clients (local device, remote server) and in positioning of key store needed for the management of outgoing transactions. The practical constraints of these architectures, which utilize the Ethereum network for trusted transaction exchange, are the data volumes, the location and synchronization of the full blockchain node and the location and the access to the Ethereum key store. Results of these experiments indicate that a full Ethereum node is not likely to reliably run on a constrained IoT devices. Therefore the architecture with remote Ethereum clients seems to be a viable approach, where two sub-options exist and differ in key store location/management. In addition, we proposed the use of architectures with a proprietary communication between the IoT device and remote blockchain client to further reduce the network traffic and enhance security. We expect it to be able to operate over low-power, low-bitrate mobile technologies, too. Our research clarifies differences in architectural approaches, but final decision for a particular ledger protocol and front-end application architecture is at strongly based on the particular intended use case.
Ilya Grishchenko, Matteo Maffei, Clara Schneidewind
Smart contracts are programs running on cryptocurrency (e.g., Ethereum) blockchains, whose popularity stem from the possibility to perform financial transactions, such as payments and auctions, in a distributed environment without need for any trusted third party. Given their financial nature, bugs or vulnerabilities in these programs may lead to catastrophic consequences, as witnessed by recent attacks. Unfortunately, programming smart contracts is a delicate task that requires strong expertise: Ethereum smart contracts are written in Solidity, a dedicated language resembling JavaScript, and shipped over the blockchain in the EVM bytecode format. In order to rigorously verify the security of smart contracts, it is of paramount importance to formalize their semantics as well as the security properties of interest, in particular at the level of the bytecode being executed. In this paper, we present the first complete small-step semantics of EVM bytecode, which we formalize in the F* proof assistant, obtaining executable code that we successfully validate against the official Ethereum test suite. Furthermore, we formally define for the first time a number of central security properties for smart contracts, such as call integrity, atomicity, and independence from miner controlled parameters. This formalization relies on a combination of hyper- and safety properties. Along this work, we identified various mistakes and imprecisions in existing semantics and verification tools for Ethereum smart contracts, thereby demonstrating once more the importance of rigorous semantic foundations for the design of security verification techniques.
Blockchain technology becomes increasingly popular. It also attracts scams, for example, Ponzi scheme, a classic fraud, has been found making a notable amount of money on Blockchain, which has a very negative impact. To help dealing with this issue, this paper proposes an approach to detect Ponzi schemes on blockchain by using data mining and machine learning methods. By verifying smart contracts on Ethereum, we first extract features from user accounts and operation codes of the smart contracts and then build a classification model to detect latent Ponzi schemes implemented as smart contracts. The experimental results show that the proposed approach can achieve high accuracy for practical use. More importantly, the approach can be used to detect Ponzi schemes even at the moment of its creation. By using the proposed approach, we estimate that there are more than 400 Ponzi schemes running on Ethereum. Based on these results, we propose to build a uniform platform to evaluate and monitor every created smart contract for early warning of scams.
Blockchain-based cryptocurrencies have demonstrated how to securely implement traditionally centralized systems, such as currencies, in a decentralized fashion. However, there have been few measurement studies on the level of decentralization they achieve in practice. We present a measurement study on various decentralization metrics of two of the leading cryptocurrencies with the largest market capitalization and user base, Bitcoin and Ethereum. We investigate the extent of decentralization by measuring the network resources of nodes and the interconnection among them, the protocol requirements affecting the operation of nodes, and the robustness of the two systems against attacks. In particular, we adapted existing internet measurement techniques and used the Falcon Relay Network as a novel measurement tool to obtain our data. We discovered that neither Bitcoin nor Ethereum has strictly better properties than the other. We also provide concrete suggestions for improving both systems.
Michel Rauchs, Andrew Glidden, Brian Gordon, Gina Pieters Β· 8 authors
The DLT ecosystem is plagued with the use of incomplete and inconsistent definitions and a lack of standardised terminology, creating a needlessly complicated landscape for everyone from experienced policymakers and developers to individuals venturing into the field for the first time. This study sets out to contribute to international discussions to create a shared, common language around DLT systems to clarify terminology and concepts.
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In traditional cloud storage systems, attribute-based encryption (ABE) is regarded as an important technology for solving the problem of data privacy and fine-grained access control. However, in all ABE schemes, the private key generator has the ability to decrypt all data stored in the cloud server, which may bring serious problems such as key abuse and privacy data leakage. Meanwhile, the traditional cloud storage model runs in a centralized storage manner, so single point of failure may leads to the collapse of system. With the development of blockchain technology, decentralized storage mode has entered the public view. The decentralized storage approach can solve the problem of single point of failure in traditional cloud storage systems and enjoy a number of advantages over centralized storage, such as low price and high throughput. In this paper, we study the data storage and sharing scheme for decentralized storage systems and propose a framework that combines the decentralized storage system interplanetary file system, the Ethereum blockchain, and ABE technology. In this framework, the data owner has the ability to distribute secret key for data users and encrypt shared data by specifying access policy, and the scheme achieves fine-grained access control over data. At the same time, based on smart contract on the Ethereum blockchain, the keyword search function on the cipher text of the decentralized storage systems is implemented, which solves the problem that the cloud server may not return all of the results searched or return wrong results in the traditional cloud storage systems. Finally, we simulated the scheme in the Linux system and the Ethereum official test network Rinkeby, and the experimental results show that our scheme is feasible.
Smart contracts are blockchain-based programs that have developed with the emergence of Ethereum, one of the most well-known blockchains. Gas, paid in Ethers (i.e., the cryptocurrency in Ethereum), is required for the costs to upload and run smart contracts on Ethereum. As cost-inefficiently designed smart contracts result in unnecessary costs, it is vital to eliminate any gas-wasteful code fragments to optimize the deployment costs. In this study, we define five gas-wasteful patterns: 'Over-public variables', 'Redundant initial values', 'Loose packing', 'Non-base unit types', and 'Nonconstant variables', based on the state variables in Solidity, the most commonly used implementation language for smart contracts in Ethereum. We also propose improvement methods related to these patterns and a solution to identify and eliminate the patterns. Furthermore, we analyze 143 real-world contracts deployed on Ethereum and find that 56% of them include the above-mentioned patterns. We also upgrade 43 of the patternmatched contracts and demonstrate that their deployment costs are decreased on an average by 13.47%, and the most-reduced rate is 64%.
Collection of intelligence is one of the key elements to organize more sophisticated methods of attacks. Open Source Intelligence (OSINT) is a technique used by attackers for reconnaissance purposes to gather information about specific targets. The accessibility to critical information about emerging systems through OSINT leads exposure of vulnerabilities and exploitation of these vulnerabilities to form widespread attack. Blockchain is one of the emerging technologies that exposed the use of crypto currencies such as Bitcoin and Ethereum. This research paper explains the use of OSINT to gather critical information about cryptocurrency miners such as Bitcoin Antminer and Ethereum Claymore and expose the vulnerabilities to exploit the configuration file of the miner manager. The research outcomes expose the vulnerability of the existing crypto currencies and use of OSINT for detection and analysis of cyberthreat in crypto currency market.
Shelly Grossman, Ittai Abraham, Guy Golan-Gueta, Yan Michalevsky Β· 7 authors
Callbacks are essential in many programming environments, but drastically complicate program understanding and reasoning because they allow to mutate object's local states by external objects in unexpected fashions, thus breaking modularity. The famous DAO bug in the cryptocurrency framework Ethereum, employed callbacks to steal $150M. We define the notion of Effectively Callback Free (ECF) objects in order to allow callbacks without preventing modular reasoning. An object is ECF in a given execution trace if there exists an equivalent execution trace without callbacks to this object. An object is ECF if it is ECF in every possible execution trace. We study the decidability of dynamically checking ECF in a given execution trace and statically checking if an object is ECF. We also show that dynamically checking ECF in Ethereum is feasible and can be done online. By running the history of all execution traces in Ethereum, we were able to verify that virtually all existing contract executions, excluding these of the DAO or of contracts with similar known vulnerabilities, are ECF. Finally, we show that ECF, whether it is verified dynamically or statically, enables modular reasoning about objects with encapsulated state.
A mathematical model for smart contracts for deployment of the initial coin offering (ICO), widely used on the Ethereum platform, is proposed. The analysis of dependence of the network capacity on such parameters as the transaction buffer size, the average transaction processing time, is performed. Evaluations are obtained of which parameters have the greatest impact on the capacity of Ethereum within the developed model.
Bitcoin has emerged as a popular digital currency and arouses the interest not only of programmers, but also of investors and academics. What interests them most is its underlying technology, the blockchain. This thesis aims at giving an overview of the current state of cryptocurrencies and compares their different designs and approaches to Bitcoin. The blockchain technology will be explained, as well as how it could impact many aspects in life by showcasing different applications of Ethereum blockchain-based smart contracts. Based on the evaluation of the different cryptocurrencies and preceding conclusions, specific cryptocurrencies will be applied to the Tasklet system before proposing the implementation of the blockchain technology in such a system, in order to establish a reward system. The paper reviews a heterogeneous, scattered body of knowledge including academic literature, but also non-scientific sources due to the constantly evolving technology. On this basis, the advantages of Bitcoin, but also its weaknesses, as well as the vast potential of blockchain are discussed. Results indicate that although Bitcoinβs framework may be limited, it will still play an important role in the future due to its dominance in the cryptocurrency market. The short display of blockchain-fueled applications and its effects has shown its potential to transform the internet, leading to the rise of the Web 3.0. Keywords: Bitcoin, Blockchain, Cryptocurrency, Distributed Ledger Technology, Smart Contract
Ethereum, a cryptocurrency currently valued at 46 billion US dollars, has grown over 6,500% in the last 12 months. Despite the growth in value, we still have very limited Ethereum network visibility. In this thesis, we analyze the Ethereum network from two vantage points: the DEVp2p network and the Ethereum Mainnet. The DEVp2p peer-to- peer (P2P) network was developed specifically for and ultimately underlies the Ethereum Mainnet. We examine overall composition of the DEVp2p network. We analyze our peer connections on the Ethereum Mainnetβthe main Ethereum network established on top of DEVp2p. We compare the Ethereum networkβs properties to those of other well-studied P2P networks, namely BitTorrent and Gnutella. We develop novel techniques to measure the Ethereum P2P network and gain visibility into this previously opaque network.
As the technologies are evolving day by day, they are able to rejuvenate any sector either individually or by incorporating other technologies. There are many prominent sectors in the market such as healthcare, education, entertainment, business, information technology, retail, etc. Every sector has its own set of profits and consequences, but apart from all, the banking or finance sector is the only sector that provides dynamicity to all other sectors and helps them to generate maximum revenue from their principal investment. In this chapter, the authors are focusing on the traditional and modern ways of banking, currencies such as cryptocurrency like Bitcoin, Ethereum, Litecoin, and how the modern currency will change the transaction procedure in the global banking system, creating an amalgamation of such currency with a current transaction system with the role of technology such as Blockchain in the betterment of the global banking system making the system fully decentralized, distributed, transparent, fast, immutable, and efficient.
This chapter describes a short-lived experiment in organizational governance that attempted to utilize algorithmic authority through cryptocurrency and block-chain technologies to create a social and political world quite unlike anything we have seen before. It details the governance structures that were promised by the developers and community members involved in the making of The decentralised autonomous organisation (DAO), and in contrast, those that were observed in its discourses before, during, and after the βexploit.β The DAO was a decentralized, crowdfunded, direct-management organization and investment platform. In the original vision of decentralized autonomous organizations, as proposed by Vitalik Buterin, founder and member of the Ethereum Foundation, a DAO is a pseudo-legal organization run by an assemblage of human and βrobotβ participants. From the earliest days of The DAO, many community members acknowledged that the enormous complexity of decentralized and algorithmic governance required a new kind of experimental βscienceβ to map the βuncharted territoryβ The DAO was entering.
The adoption of blockchain-based distributed computation platforms is growing fast. Some of these platforms, such as Ethereum, provide support for implementing smart contracts, which are envisioned to have novel applications in a broad range of areas, including finance and Internet-of-Things. However, a significant number of smart contracts deployed in practice suffer from security vulnerabilities, which enable malicious users to steal assets from a contract or to cause damage. Vulnerabilities present a serious issue since contracts may handle financial assets of considerable value, and contract bugs are non-fixable by design. To help developers create more secure smart contracts, we introduce FSolidM, a framework rooted in rigorous semantics for designing con- tracts as Finite State Machines (FSM). We present a tool for creating FSM on an easy-to-use graphical interface and for automatically generating Ethereum contracts. Further, we introduce a set of design patterns, which we implement as plugins that developers can easily add to their contracts to enhance security and functionality.