Albatross: An optimistic consensus algorithm

The area of distributed ledgers is a vast and quickly developing landscape. At the heart of most distributed ledgers is their consensus protocol. The consensus protocol describes the way participants in a distributed network interact with each other to obtain and agree on a shared state. While classical consensus Byzantine fault tolerant (BFT) algorithms are designed to work in closed, size-limited networks only, modern distributed ledgers -- and blockchains in particular -- often focus on open, permissionless networks. In this paper, we present a novel blockchain consensus algorithm, called Albatross, inspired by speculative BFT algorithms. Transactions in Albatross benefit from strong probabilistic finality. We describe the technical specification of Albatross in detail and analyse its security and performance. We conclude that the protocol is secure under regular PBFT security assumptions and has a performance close to the theoretical maximum for single-chain Proof-of-Stake consensus algorithms

On security and privacy of consensus-based protocols in blockchain and smart grid

In recent times, distributed consensus protocols have received widespread attention in the area of blockchain and smart grid. Consensus algorithms aim to solve an agreement problem among a set of nodes in a distributed environment. Participants in a blockchain use consensus algorithms to agree on data blocks containing an ordered set of transactions. Similarly, agents in the smart grid employ consensus to agree on specific values (e.g., energy output, market-clearing price, control parameters) in distributed energy management protocols. This thesis focuses on the security and privacy aspects of a few popular consensus-based protocols in blockchain and smart grid. In the blockchain area, we analyze the consensus protocol of one of the most popular payment systems: Ripple. We show how the parameters chosen by the Ripple designers do not prevent the occurrence of forks in the system. Furthermore, we provide the conditions to prevent any fork in the Ripple network. In the smart grid area, we discuss the privacy issues in the Economic Dispatch (ED) optimization problem and some of its recent solutions using distributed consensus-based approaches. We analyze two state of the art consensus-based ED protocols from Yang et al. (2013) and Binetti et al. (2014). We show how these protocols leak private information about the participants. We propose privacy-preserving versions of these consensus-based ED protocols. In some cases, we also improve upon the communication cost

Security and privacy of incentive-driven mechanisms

While cryptographic tools offer practical security and privacy supported by theory and formal proofs, there are often gaps between the theory and intricacies of the real world. This is especially apparent in the realm of game theoretic applications where protocol participants are motivated by incentives and preferences on the protocol outcome. These incentives can lead to additional requirements or unexpected attack vectors, making standard cryptographic concepts inapplicable. The goal of this thesis is to bridge some of the gaps between cryptography and incentive-driven mechanisms. The thesis will consist of three main research threads, each studying the privacy or security of a game-theoretic scenario in non-standard cryptographic frameworks in order to satisfy the scenario’s unique requirements. Our first scenario is preference aggregation, where we will analyze the privacy of voting rules while requiring the rules to be deterministic. Then, we will study games, and how to achieve collusion-freeness (and its composable version, collusion-preservation) in the decentralized setting. Finally, we explore the robustness of Nakamoto-style proof-of-work blockchains against 51% attacks when the main security assumption of honest majority fails. Most of the results in this thesis are also published in the following (in order): Ch. 3: [103], Ch. 4: [47], and Ch. 5: [104]. Our first focus is preference aggregation—in particular voting rules. Specifically, we answer the crucial question: How private is the voting rule we use and the voting information we release? This natural and seemingly simple question was sidestepped in previous works, where randomization was added to voting rules in order to achieve the widely-known notion of differential privacy (DP). Yet, randomness in an election can be undesirable, and may alter voter incentives and strategies. In this chapter of our thesis, we expand and improve upon previous works and study deterministic voting rules. In a similarly well-accepted framework of distributional differential privacy (DDP), we develop new techniques in analyzing and comparing the privacy of voting rules—leading to a new measure to contrast different rules in addition to existing ones in the field of social choice. We learn the positive message that even vote tallies have very limited privacy leakage that decreases quickly in the number of votes, and a surprising fact that outputting the winner using different voting rules can result in asymptotically different privacy leakage. Having studied privacy in the context of parties with preferences and incentives, we turn our attention to the secure implementation of games. Specifically, we study the issue of collusion and how to avoid it. Collusion, or subliminal communication, can introduce undesirable coalitions in games that allow malicious parties, e.g. cheating poker players, a wider set of strategies. Standard cryptographic security is insufficient to address the issue, spurring on a line of work that defined and constructed collusion-free (CF), or its composable version, collusion-preserving (CP) protocols. Unfortunately, they all required strong assumptions on the communication medium, such as physical presence of the parties, or a restrictive star-topology network with a trusted mediator in the center. In fact, CF is impossible without restricted communication, and CP is conjectured to always require a mediator. Thus, circumventing these impossibilities is necessary to truly implement games in a decentralized setting. Fortunately, in the rational setting, the attacker can also be assumed to have utility. By ensuring collusion is only possible by sending incorrect, penalizable messages, and composing our protocol with a blockchain protocol as the source of the penalization, we prove our protocol as CP against incentive-driven attackers in a framework of rational cryptography called rational protocol design (RPD). Lastly, it is also useful to analyze the security of the blockchain and its associated cryptocurrencies—cryptographic transaction ledger protocols with embedded monetary value— using a rational cryptography framework like RPD. Our last chapter studies the incentives of attackers that perform 51% attacks by breaking the main security assumption of honest majority in proof-of-work (PoW) blockchains such as Bitcoin and Ethereum Classic. Previous works abstracted the blockchain protocol and the attacker’s actions, analyzing 51% attacks via various techniques in economics or probability theory. This leads open the question of exploring this attack in a model closer to standard cryptographic analyses. We answer this question by working in the RPD framework. Improving upon previous analyses that geared towards only mining rewards, we construct utility functions that model the incentives of 51% attackers. Under the RPD framework, we are able to determine when an attacker is incentivized to attack a given instantiation of the blockchain protocol. More importantly, we can make general statements that indicate changes to protocol parameters to make it secure against all rational attackers under these incentives

SoK: Public Randomness

Public randomness is a fundamental component in many cryptographic protocols and distributed systems and often plays a crucial role in ensuring their security, fairness, and transparency properties. Driven by the surge of interest in blockchain and cryptocurrency platforms and the usefulness of such component in those areas, designing secure protocols to generate public randomness in a distributed manner has received considerable attention in recent years. This paper presents a systematization of knowledge on the topic of public randomness with a focus on cryptographic tools providing public verifiability and key themes underlying these systems. We provide concrete insights on how state-of-the-art protocols achieve this task efficiently in an adversarial setting and present various research gaps that may be suitable for future research

Themelio: a new blockchain paradigm

Public blockchains hold great promise in building protocols that uphold security properties like transparency and consistency based on internal, incentivized cryptoeconomic mechanisms rather than preexisting trust in participants. Yet user-facing blockchain applications beyond "internal" immediate derivatives of blockchain incentive models, like cryptocurrency and decentralized finance, have not achieved widespread development or adoption. We propose that this is not primarily due to "engineering" problems in aspects such as scaling, but due to an overall lack of transferable endogenous trust—the twofold ability to uphold strong, internally-generated security guarantees and to translate them into application-level security. Yet we argue that blockchains, due to their foundation on game-theoretic incentive models rather than trusted authorities, are uniquely suited for building transferable endogenous trust, despite their current deficiencies. We then engage in a survey of existing public blockchains and the difficulties and crises that they have faced, noting that in almost every case, problems such as governance disputes and ecosystem inflexibility stem from a lack of transferable endogenous trust. Next, we introduce Themelio, a decentralized, public blockchain designed to support a new blockchain paradigm focused on transferable endogenous trust. Here, the blockchain is used as a low-level, stable, and simple root of trust, capable of sharing this trust with applications through scalable light clients. This contrasts with current blockchains, which are either applications or application execution platforms. We present evidence that this new paradigm is crucial to achieving flexible deployment of blockchain-based trust. We then describe the Themelio blockchain in detail, focusing on three areas key to its overall theme of transferable, strong endogenous trust: a traditional yet enhanced UTXO model with features that allow powerful programmability and light-client composability, a novel proof-of-stake system with unique cryptoeconomic guarantees against collusion, and Themelio's unique cryptocurrency "mel", which achieves stablecoin-like low volatility without sacrificing decentralization and security. Finally, we explore the wide variety of novel, partly off-chain applications enabled by Themelio's decoupled blockchain paradigm. This includes Astrape, a privacy-protecting off-chain micropayment network, Bitforest, a blockchain-based PKI that combines blockchain-backed security guarantees with the performance and administration benefits of traditional systems, as well as sketches of further applications