SoK

Eskandari, Shayan; Salehi, Mehdi; Gu, Wanyun Catherine; Clark, Jeremy

doi:10.1145/3479722.3480994

Cited by 31 publications

(9 citation statements)

References 35 publications

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“…Token prices from external sources are inserted into blockchains by ora-cles. Oracles can be manipulated to send an erroneous price feed [22], [192]- [195]. Bridges, or users themselves can therefore use the wrong exchange rates leading to unfair or unrealistic trades.…”

Section: Manipulation Of Exchange Rates ( 22mentioning

confidence: 99%

SoK: Security and Privacy of Blockchain Interoperability [Extended Version]

Augusto,

Belchior,

Correia

et al. 2024

Preprint

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Recent years have witnessed significant advancements in cross-chain technology. However, the field faces two pressing challenges when it comes to security and privacy. Hacks on cross-chain bridges have led to monetary losses of around 3 billion USD, highlighting flaws in security models governing interoperability mechanisms (IMs) and the ineffectiveness of incident response frameworks. Additionally, the exploration of privacy within cross-chain scenarios remains relatively unexplored. Hackers benefit from extensive privacy, whereas users and bridge operators experience restricted privacy, thereby broadening the potential attack surface for adversaries. In this paper, we present the most comprehensive study to date on the security and privacy of blockchain interoperability. Our study employs a rigorous systematic literature review, yielding a corpus of 178 relevant documents, including 58 academic papers and 120 gray literature documents, out of a pool of 531. We systematically categorize 56 interoperability solutions based on a newly created taxonomy focusing on security and privacy considerations. Our dataset, comprising academic research, disclosures from bug bounty programs, and audit reports, exposes 45 cross-chain vulnerabilities, 25 theoretical attacks, and 88 mitigation strategies. Leveraging this data, we analyze 14 notable bridge hacks accounting for over USD 2.9 billion in losses, mapping them to the identified vulnerabilities. Our findings reveal that a substantial portion (65.8\%) of stolen funds originates from projects secured by permissioned intermediary networks with unsecured cryptographic key operations. Regarding privacy, we demonstrate that achieving unlinkability in cross-chain transactions is contingent on the underlying ledgers providing some form of confidentiality. In conclusion, our study offers critical insights into the challenges and vulnerabilities within the realm of cross-chain interoperability. We pinpoint promising directions for future research that can guide both industry practitioners and academics toward substantial advancements in this field. Our work underscores the urgency of enhancing security and privacy measures in cross-chain technology to mitigate the substantial financial risks associated with bridge hacks and to foster user trust in the blockchain ecosystem.

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Section: Manipulation Of Exchange Rates ( 22mentioning

confidence: 99%

SoK: Security and Privacy of Blockchain Interoperability [Extended Version]

Augusto,

Belchior,

Correia

et al. 2024

Preprint

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“…A Systemization of Knowledge titled "SoK: Oracles from the Ground Truth to Market Manipulation" by Eskandari et al [161] provides a thorough summary of available research at the time. Included in the paper is a table comparing available oracle implementations and modules.…”

Section: Summary Of Researchmentioning

confidence: 99%

Missing Links: Current Trends and Future Potential in the Application of Blockchain Oracles

Heidt,

Sandner,

Anders

2024

Preprint

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Oracles have been suggested as a vital piece of infrastructure necessary to allow blockchain-based smart contracts to reach their full potential by interacting with real-world data. This paper begins by providing an approachable entry point to the oracle problem and the current landscape of existing solutions. From there, we provide an overview of published research to narrow down unexplored research directions and derive questions for interviews. Finally, the results of 15 unstructured expert interviews are presented and discussed. The focus here is the industry landscape of oracle projects, opportunities for innovation, and challenges needing to be overcome.

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“…We assume the existence of an on-chain lending pool L = {P 1 , P 2 , ..., P n }, where P i is the i-th borrowing position in the lending pool. Each borrowing position P = D t , C t is parametrized by the debt D t the borrower owes, and the collateral C t the borrower owns at time t. We denote the price of the debt cryptocurrency towards the collateral cryptocurrency, provided by an oracle [7], as p t . In the following, we consider the case where each borrowing position consists of a single debt cryptocurrency and a single collateral cryptocurrency.…”

Section: Collateralized Debt Modelmentioning

confidence: 99%

“…To identify a short liquidation, we first gather the ERC-20 transfer and asset swap events from a liquidation transaction. 7 With these events, we then filter 7 ERC-20 is a fungible token standard, which is extensively adopted in the Ethereum DeFi ecosystem. An event refers to a log emitted by a smart contract during its execution.…”

Section: Metric 1 (Fsl Collateral Release)mentioning

confidence: 99%

Mitigating Decentralized Finance Liquidations with Reversible Call Options

Qin¹,

Jens²,

Zhou³

et al. 2023

Preprint

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Liquidations in Decentralized Finance (DeFi) are both a blessing and a curse -whereas liquidations prevent lenders from capital loss, they simultaneously lead to liquidation spirals and system-wide failures. Since most lending and borrowing protocols assume liquidations are indispensable, there is an increased interest in alternative constructions that prevent immediate systemic-failure under uncertain circumstances. In this work, we introduce reversible call options, a novel financial primitive that enables the seller of a call option to terminate it before maturity. We apply reversible call options to lending in DeFi and devise Miqado, a protocol for lending platforms to replace the liquidation mechanisms. To the best of our knowledge, Miqado is the first protocol that actively mitigates liquidations to reduce the risk of liquidation spirals. Instead of selling collateral, Miqado incentivizes external entities, so-called supporters, to top-up a borrowing position and grant the borrower additional time to rescue the debt. Our simulation shows that Miqado reduces the amount of liquidated collateral by 89.82% in a worst-case scenario.

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SoK

Cited by 31 publications

References 35 publications

SoK: Security and Privacy of Blockchain Interoperability [Extended Version]

SoK: Security and Privacy of Blockchain Interoperability [Extended Version]

Missing Links: Current Trends and Future Potential in the Application of Blockchain Oracles

Mitigating Decentralized Finance Liquidations with Reversible Call Options

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