Issue, Trade, Redeem: Crossing Systems Bounds with Cryptocurrency-Backed Tokens

The ecosystem of cryptocurrencies has been steadily growing since the introduction of Bitcoin, the first decentralised digital currency. While the notion of trustless asset exchange lies at the core of most blockchain-based systems, existing cross-chain communication techniques expose limitations regarding security, performance, and usability. As a result, centralised liquidity providers remain the preferred way for cross-chain transactions. We systematise the notion of cryptocurrency-backed tokens, an approach towards trustless blockchain interoperability. We then propose a protocol for issuing, trading, and redeeming Bitcoin-backed tokens on Ethereum. Consequently, we provide an overview of system requirements, discuss open challenges regarding performance and security, and give an outlook on possible extensions. Our protocol, which requires no modifications to Bitcoin’s consensus rules, can thereby be generalised to also support other cryptocurrencies.

[1]  Ethan Buchman,et al.  Tendermint: Byzantine Fault Tolerance in the Age of Blockchains , 2016 .

[2]  Stefan Mangard,et al.  Malware Guard Extension: Using SGX to Conceal Cache Attacks , 2017, DIMVA.

[3]  Satoshi Nakamoto.  Bitcoin : A Peer-to-Peer Electronic Cash System , 2009 .

[4]  Aggelos Kiayias,et al.  The Bitcoin Backbone Protocol: Analysis and Applications , 2015, EUROCRYPT.

[5]  Ethan Heilman,et al.  Atomically Trading with Roger: Gambling on the Success of a Hardfork , 2017, DPM/CBT@ESORICS.

[6]  Srinivas Devadas,et al.  Intel SGX Explained , 2016, IACR Cryptol. ePrint Arch..

[7]  Ilya Sergey,et al.  Scilla: a Smart Contract Intermediate-Level LAnguage , 2018, ArXiv.

[8]  Vitalik Buterin.  A NEXT GENERATION SMART CONTRACT & DECENTRALIZED APPLICATION PLATFORM , 2015 .

[9]  Maurice Herlihy,et al.  Atomic Cross-Chain Swaps , 2018, PODC.

[10]  Bryan Ford,et al.  Enhancing Bitcoin Security and Performance with Strong Consistency via Collective Signing , 2016, USENIX Security Symposium.

[11]  Marcus Peinado,et al.  Inferring Fine-grained Control Flow Inside SGX Enclaves with Branch Shadowing , 2016, USENIX Security Symposium.

[12]  Shweta Shinde,et al.  Preventing Your Faults From Telling Your Secrets: Defenses Against Pigeonhole Attacks , 2015, ArXiv.

[13]  Jason Teutsch,et al.  A scalable verification solution for blockchains , 2019, ArXiv.

[14]  Iddo Bentov,et al.  Proof of Activity: Extending Bitcoin's Proof of Work via Proof of Stake [Extended Abstract]y , 2014, PERV.

[15]  M. Rosenfeld.  Overview of Colored Coins , 2013 .

[16]  Edgar R. Weippl,et al.  (Short Paper) A Wild Velvet Fork Appears! Inclusive Blockchain Protocol Changes in Practice , 2018, IACR Cryptol. ePrint Arch..

[17]  Marcus Peinado,et al.  Controlled-Channel Attacks: Deterministic Side Channels for Untrusted Operating Systems , 2015, 2015 IEEE Symposium on Security and Privacy.

[18]  Björn Scheuermann,et al.  Bitcoin and Beyond: A Technical Survey on Decentralized Digital Currencies , 2016, IEEE Communications Surveys & Tutorials.

[19]  Marta Piekarska,et al.  Strong Federations: An Interoperable Blockchain Solution to Centralized Third Party Risks , 2016, ArXiv.

[20]  Fan Zhang,et al.  Tesseract: Real-Time Cryptocurrency Exchange using Trusted Hardware , 2017, IACR Cryptol. ePrint Arch..

[21]  Jeremy Rubin,et al.  Merkelized Abstract Syntax Trees , 2014 .

[22]  Elaine Shi,et al.  Snow White: Provably Secure Proofs of Stake , 2016, IACR Cryptol. ePrint Arch..

[23]  Jeremy Clark,et al.  Bitcoin's academic pedigree , 2017, ACM Queue.

[24]  Juan Benet,et al.  IPFS - Content Addressed, Versioned, P2P File System , 2014, ArXiv.

[25]  Ralph C. Merkle,et al.  A Digital Signature Based on a Conventional Encryption Function , 1987, CRYPTO.

[26]  Stefan Thomas,et al.  A Protocol for Interledger Payments , 2016 .

[27]  DR. Gavin Wood.  POLKADOT: VISION FOR A HETEROGENEOUS MULTI-CHAIN FRAMEWORK , 2016 .

[28]  Tim Roughgarden,et al.  Algorithmic game theory , 2010, Commun. ACM.

[29]  Brian Neil Levine,et al.  Bobtail: A Proof-of-Work Target that Minimizes Blockchain Mining Variance (Draft) , 2017, ArXiv.

[30]  Aggelos Kiayias,et al.  Ouroboros Praos: An adaptively-secure, semi-synchronous proof-of-stake protocol , 2017, IACR Cryptol. ePrint Arch..

[31]  Elaine Shi,et al.  The Honey Badger of BFT Protocols , 2016, CCS.

[32]  Eli Ben-Sasson,et al.  Zerocash: Decentralized Anonymous Payments from Bitcoin , 2014, 2014 IEEE Symposium on Security and Privacy.

[33]  Rüdiger Kapitza,et al.  AsyncShock: Exploiting Synchronisation Bugs in Intel SGX Enclaves , 2016, ESORICS.

[34]  Srdjan Capkun,et al.  Software Grand Exposure: SGX Cache Attacks Are Practical , 2017, WOOT.

[35]  Aviv Zohar,et al.  PHANTOM: A Scalable BlockDAG Protocol , 2018, IACR Cryptol. ePrint Arch..

[36]  Silvio Micali,et al.  ALGORAND: The Efficient and Democratic Ledger , 2016, ArXiv.

[37]  Noam Nisan,et al.  Algorithmic Mechanism Design , 2001, Games Econ. Behav..

[38]  Johannes Götzfried,et al.  Cache Attacks on Intel SGX , 2017, EUROSEC.

[39]  Aggelos Kiayias,et al.  Ouroboros: A Provably Secure Proof-of-Stake Blockchain Protocol , 2017, CRYPTO.

[40]  Aggelos Kiayias,et al.  Non-Interactive Proofs of Proof-of-Work , 2020, IACR Cryptol. ePrint Arch..

[41]  Pieter Wuille,et al.  Enabling Blockchain Innovations with Pegged Sidechains , 2014 .

[42]  Emin Gün Sirer,et al.  Teechan: Payment Channels Using Trusted Execution Environments , 2016, ArXiv.

[43]  Elaine Shi,et al.  FruitChains: A Fair Blockchain , 2017, IACR Cryptol. ePrint Arch..

[44]  Gorka Irazoqui Apecechea,et al.  CacheZoom: How SGX Amplifies The Power of Cache Attacks , 2017, CHES.

[45]  R. Pass.  Hybrid Consensus : Scalable Permissionless Consensus , 2016 .