Performance-Based Analysis of Blockchain Scalability Metric

Cryptocurrencies like Bitcoin and Ethereum, are widely known applications of blockchain technology, have drawn much attention and are largely recognized in recent years. Initially Bitcoin and Ethereum processed 7 and 15 Transactions Per Second (TPS) respectively, whereas VISA and Paypal process 1700 and 193 TPS respectively. The biggest challenge to blockchain adoption is scalability, defined as the capacity to change the block size to handle the growing amount of load. This paper attempts to present the existing scalability solutions which are broadly classified into three layers: Layer 0 solutions focus on optimization of propagation protocol for transactions and blocks, Layer 1 solutions are based on the consensus algorithms and data structure, and Layer 2 solutions aims to decrease the load of the primary chain by implementing solutions outside the chain. We present a classification and comparison of existing blockchain scalability solutions based on performance along with their pros and cons

A Survey of Layer-Two Blockchain Protocols

After the success of the Bitcoin blockchain, came several cryptocurrencies and blockchain solutions in the last decade. Nonetheless, Blockchain-based systems still suffer from low transaction rates and high transaction processing latencies, which hinder blockchains' scalability. An entire class of solutions, called Layer-1 scalability solutions, have attempted to incrementally improve such limitations by adding/modifying fundamental blockchain attributes. Recently, a completely different class of works, called Layer-2 protocols, have emerged to tackle the blockchain scalability issues using unconventional approaches. Layer-2 protocols improve transaction processing rates, periods, and fees by minimizing the use of underlying slow and costly blockchains. In fact, the main chain acts just as an instrument for trust establishment and dispute resolution among Layer-2 participants, where only a few transactions are dispatched to the main chain. Thus, Layer-2 blockchain protocols have the potential to transform the domain. However, rapid and discrete developments have resulted in diverse branches of Layer-2 protocols. In this work, we systematically create a broad taxonomy of such protocols and implementations. We discuss each Layer-2 protocol class in detail and also elucidate their respective approaches, salient features, requirements, etc. Moreover, we outline the issues related to these protocols along with a comparative discussion. Our thorough study will help further systematize the knowledge dispersed in the domain and help the readers to better understand the field of Layer-2 protocols.Comment: 21 pages, 15 figures, 2 table

Commit-Chains: Secure, Scalable Off-Chain Payments

Current permissionless blockchains suffer from scalability limitations. To scale without changing the underlying blockchain, one avenue is to lock funds into blockchain smart-contracts (collateral) and enact transactions outside, or off- the blockchain, via accountable peer-to-peer messages. Disputes among peers are resolved with appropriate collateral redistribution on the blockchain. In this work we lay the foundations for commit-chains, a novel off-chain scaling solution for existing blockchains where an untrusted and non-custodial operator commits the state of its user account balances via constant-sized, periodic checkpoints. Users dispute operator misbehavior via a smart contract. The commit-chain paradigm enables for the first time that off-chain users can receive payments while being offline. Moreover, locked funds can be managed efficiently at constant communication costs, alleviating collateral fragmentation. We instantiate two account-based commit-chain constructions: NOCUST, based on a cost-effective challenge-response dispute mechanism; and NOCUST-ZKP, which provides provably correct operation via zkSNARKs. These constructions offer a trade-off between correctness, verification, and efficiency while both are practical and ensure key properties such as balance safety; that is, no honest user loses coins. We implemented both constructions on a smart contract enabled blockchain. Our evaluation demonstrates that NOCUST\u27s operational costs in terms of computation and communication scale logarithmically in the number of users and transactions, and allow very efficient lightweight clients (a user involved in e.g. 100 daily transactions only needs to store a constant 46 kb of data, allowing secure payments even on mobile devices). NOCUST is operational in production since March 2019

Security and efficiency of collateral in decentralized finance

Decentralized Finance (DeFi) promises to be a new contender for a radically new financial system. Its foundations are censorship-resistant, non-custodial, and transparent financial protocols. Securing these protocols is achieved by combining cryptographic primitives with economic incentives instead of relying on trusted intermediaries. In DeFi, financial collateral is the central incentive measure providing repercussions against "misbehaving” agents. However, requiring collateral introduces security and efficiency concerns. (i) Securing DeFi protocols using price-volatile and complex assets requires careful risk management. (ii) Efficiency of capital is diminished since locking assets is an opportunity cost and restricts access to DeFi to agents with sufficient funds. We tackle these issues by developing new protocols to optimize collateral requirements in existing DeFi protocols safely. Our contributions are threefold. First, we provide a risk-based classification of collateral applied in DeFi protocols. Specifically, the classification serves as the starting point to develop a model capturing the security property of financial collateral with unique risks in DeFi. Second, we present two protocols that can be integrated into existing DeFi protocols. Promise transforms suitable DeFi protocols into a subscription mechanism lowering the initial capital locking requirements thus tackling the capital efficiency of collateral. Balance is a protocol to reduce collateral in DeFi protocols safely. Balance is similar to a credit scoring system where “well-behaving” agents enjoy a lowered collateral. As such, Balance can be used both to tailor security of protocols by required per-agent collateral requirements instead of per-protocol requirements and, at the same time, increase capital efficiency of collateral. We demonstrate the practical applicability of Promise and Balance by decreasing collateral in the XCLAIM cross-chain communication protocol by up to 10% under conservative assumptions. Third, we discuss the practical security of financial collateral. We outline new types of attacks on DeFi protocols secured by collateral through trustless coordination of rational agents and so-called flash loans with the example of the popular Maker protocol. We conclude by noting the perils of constructing collateralized DeFi protocols and outlining strands of future work to increase their security and efficiency.Open Acces

TinyEVM: Off-Chain Smart Contracts on Low-Power IoT Devices

With the rise of the Internet of Things (IoT), billions of devices ranging from simple sensors to smart-phones will participate in billions of micropayments. However, current centralized solutions are unable to handle a massive number of micropayments from untrusted devices.Blockchains are promising technologies suitable for solving some of these challenges.Particularly, permissionless blockchains such as Ethereum and Bitcoin have drawn the attention of the research community.However, the increasingly large-scale deployments of blockchain reveal some of their scalability limitations. Prominent proposals to scale the payment system include off-chain protocols such as payment channels. However, the leading proposals assume powerful nodes with an always-on connection and frequent synchronization. These assumptions require in practice significant communication, memory, and computation capacity, whereas IoT devices face substantial constraints in these areas. Existing approaches also do not capture the logic and process of IoT, where applications need to process locally collected sensor data to allow for full use of IoT micro-payments.In this paper, we present TinyEVM, a novel system to generate and execute off-chain smart contracts based on sensor data.TinyEVM\u27s goal is to enable IoT devices to perform micro-payments and, at the same time, address the device constraints.We investigate the trade-offs of executing smart contracts on low-power IoT devices using TinyEVM.We test our system with 7,000 publicly verified smart contracts, where TinyEVM achieves to deploy 93 % of them without any modification.Finally, we evaluate the execution of off-chain smart contracts in terms of run-time performance, energy, and memory requirements on IoT devices.Notably, we find that low-power devices can deploy a smart contract in 215 ms on average, and they can complete an off-chain payment in 584 ms on average

Snappy: Fast On-chain Payments with Practical Collaterals

Permissionless blockchains offer many advantages but also have significant limitations including high latency. This prevents their use in important scenarios such as retail payments, where merchants should approve payments fast. Prior works have attempted to mitigate this problem by moving transactions off the chain. However, such Layer-2 solutions have their own problems: payment channels require a separate deposit towards each merchant and thus significant locked-in funds from customers; payment hubs require very large operator deposits that depend on the number of customers; and side-chains require trusted validators. In this paper, we propose Snappy, a novel solution that enables recipients, like merchants, to safely accept fast payments. In Snappy, all payments are on the chain, while small customer collaterals and moderate merchant collaterals act as payment guarantees. Besides receiving payments, merchants also act as statekeepers who collectively track and approve incoming payments using majority voting. In case of a double-spending attack, the victim merchant can recover lost funds either from the collateral of the malicious customer or a colluding statekeeper (merchant). Snappy overcomes the main problems of previous solutions: a single customer collateral can be used to shop with many merchants; merchant collaterals are independent of the number of customers; and validators do not have to be trusted. Our Ethereum prototype shows that safe, fast (<2 seconds) and cheap payments are possible on existing blockchains.Comment: Network and Distributed Systems Security (NDSS) Symposium 2020, 23-26 February 2020, San Diego, CA, US

Enhancing Trust in Devices and Transactions of the Internet of Things

With the rise of the Internet of Things (IoT), billions of smart embedded devices will interact frequently.These interactions will produce billions of transactions.With IoT, users can utilize their phones, home appliances, wearables, or any other wireless embedded device to conduct transactions.For example, a smart car and a parking lot can utilize their sensors to negotiate the fees of a parking spot.The success of IoT applications highly depends on the ability of wireless embedded devices to cope with a large number of transactions.However, these devices face significant constraints in terms of memory, computation, and energy capacity.With our work, we target the challenges of accurately recording IoT transactions from resource-constrained devices. We identify three domain-problems: a) malicious software modification, b) non-repudiation of IoT transactions, and c) inability of IoT transactions to include sensors readings and actuators.The motivation comes from two key factors.First, with Internet connectivity, IoT devices are exposed to cyber-attacks.Internet connectivity makes it possible for malicious users to find ways to connect and modify the software of a device.Second, we need to store transactions from IoT devices that are owned or operated by different stakeholders.The thesis includes three papers. In the first paper, we perform an empirical evaluation of Secure Boot on embedded devices.In the second paper, we propose IoTLogBlock, an architecture to record off-line transactions of IoT devices.In the third paper, we propose TinyEVM, an architecture to execute off-chain smart contracts on IoT devices with an ability to include sensor readings and actuators as part of IoT transactions