He-HTLC: Revisiting Incentives in HTLC

Hashed Time-Locked Contracts (HTLCs) are a widely used primitive in blockchain systems such as payment channels, atomic swaps, etc. Unfortunately, HTLC is incentive-incompatible and is vulnerable to bribery attacks. The state-of-the-art solution is MAD-HTLC (Oakland\u2721), which proposes an elegant idea that leverages miners\u27 profit-driven nature to defeat bribery attacks. In this paper, we show that MAD-HTLC is still vulnerable as it only considers a somewhat narrow set of passive strategies by miners. Through a family of novel reverse-bribery attacks, we show concrete active strategies that miners can take to break MAD-HTLC and profit at the loss of MAD-HTLC users. For these attacks, we present their implementation and game-theoretical profitability analysis. Based on the learnings from our attacks, we propose a new HTLC realization, He-HTLC (Our specification is lightweight and inert to incentive manipulation attacks. Hence, we call it He-HTLC where He stands for Helium.) that is provably secure against all possible strategic manipulation (passive and active). In addition to being secure in a stronger adversary model, He-HTLC achieves other desirable features such as low and user-adjustable collateral, making it more practical to implement and use the proposed schemes. We implemented He-HTLC on Bitcoin and the transaction cost of He-HTLC is comparative to average Bitcoin transaction fees

Breaking the Chains of Rationality: Understanding the Limitations to and Obtaining Order Policy Enforcement

Order manipulation attacks such as frontrunning and sandwiching have become an increasing concern in blockchain applications such as DeFi. To protect from such attacks, several recent works have designed order policy enforcement (OPE) protocols to order transactions fairly in a data-independent fashion. However, while the manipulation attacks are motivated by monetary profits, the defenses assume honesty among a significantly large set of participants. In existing protocols, if all participants are rational, they may be incentivized to collude and circumvent the order policy without incurring any penalty. This work makes two key contributions. First, we explore whether the need for the honesty assumption is fundamental. Indeed, we show that it is impossible to design OPE protocols under some requirements when all parties are rational. Second, we explore the tradeoffs needed to circumvent the impossibility result. In the process, we propose a novel concept of rationally binding transactions that allows us to construct AnimaguSwap(A key design in AnimaguSwap is that user orders may transform to a different direction---like the fictional creatures Animagi in Harry Potter---in order to achieve the desired game theoretic properties) , the first content-oblivious Automated Market Makers (AMM) that is secure under rationality