Mitigating Frontrunning Attacks on Ethereum Smart Contracts Using Cryptographic Protocols

Core Concepts

FIRST, a framework that prevents frontrunning, backrunning, and sandwich attacks on Ethereum smart contracts by leveraging cryptographic protocols such as verifiable delay functions and aggregate signatures.

Abstract

The paper proposes FIRST, a framework that prevents frontrunning, backrunning, and sandwich attacks on Ethereum smart contracts. The key ideas are:

Each user transaction is delayed by a predetermined time (t1) before entering the mempool, which is longer than the expected waiting time (t2) of the transaction in the mempool. This ensures that a potential attacker's transaction cannot be included in the same block as the user's transaction.

The delay time t1 is dynamically adjusted based on an empirical analysis of the relationship between transaction priority fees and confirmation times on the Ethereum network. This allows FIRST to recommend an optimal priority fee that significantly reduces the likelihood of transactions being frontrun.

FIRST utilizes cryptographic primitives such as verifiable delay functions (VDFs) and aggregate signatures to enforce the delay and verify the correctness of the VDF evaluation without relying on a trusted third party.

The paper provides a formal security analysis of FIRST using the Universal Composability (UC) framework and experimentally evaluates its effectiveness using real-world Ethereum and Binance Smart Chain transaction data. The results show that with FIRST, the probability of frontrunning in both chains is near zero.

Stats

The average priority fee (favg) paid by transactions that waited less than t2 time in the mempool before being posted on the blockchain.

Quotes

"FIRST is built using cryptographic protocols including verifiable delay functions and aggregate signatures."
"We formally prove the security of FIRST using the universal composability framework, and experimentally demonstrate its effectiveness using Ethereum and Binance Smart Chain blockchain data."

Key Insights Distilled From

FIRST: FrontrunnIng Resilient Smart ConTracts

by Emrah Saribo... at arxiv.org 04-23-2024

https://arxiv.org/pdf/2204.00955.pdf

Deeper Inquiries

How can FIRST be extended to support other blockchain platforms beyond Ethereum and Binance Smart Chain

To extend FIRST to support other blockchain platforms beyond Ethereum and Binance Smart Chain, the framework can be adapted to work with the specific features and protocols of the target blockchain. Here are some steps to achieve this:

Blockchain Compatibility: Understand the consensus mechanism, smart contract capabilities, and transaction processing of the new blockchain platform. Modify the VDF parameters, aggregate signature scheme, and fee calculation mechanism to align with the unique characteristics of the target blockchain.

Protocol Flexibility: Ensure that the design of FIRST is modular and flexible to accommodate different blockchain architectures. This may involve adjusting the system parameters, key generation processes, and verification protocols to suit the requirements of the new platform.

Implementation and Testing: Develop and test the adapted version of FIRST on the new blockchain platform. Conduct thorough testing to ensure that the framework functions effectively and securely in the new environment.

Community Engagement: Engage with the developer community of the target blockchain platform to gather feedback, address any compatibility issues, and enhance the adoption of FIRST on the new platform.

By following these steps and customizing the framework to meet the specific needs of different blockchain platforms, FIRST can be successfully extended to support a wider range of networks.

What are the potential trade-offs between the delay introduced by FIRST and the overall transaction throughput of the blockchain network

The delay introduced by FIRST to prevent frontrunning attacks can have implications on the overall transaction throughput of the blockchain network. Here are some potential trade-offs to consider:

Latency vs. Security: Increasing the delay time (t1) in FIRST enhances security by reducing the likelihood of frontrunning attacks. However, a longer delay can impact transaction latency and reduce the overall transaction throughput of the network.

Transaction Processing: The VDF computation and verification process in FIRST may add overhead to transaction processing, potentially slowing down the confirmation of transactions on the blockchain.

Network Congestion: During periods of high network congestion, the delay introduced by FIRST could exacerbate delays in transaction confirmation, leading to potential bottlenecks and reduced network efficiency.

Optimization Strategies: To mitigate the trade-offs, optimization strategies such as dynamic adjustment of delay times based on network conditions, efficient VDF implementations, and parallel processing of transactions can be explored to balance security and transaction throughput.

Balancing the need for security with the impact on transaction throughput is crucial in designing and implementing FIRST to ensure optimal performance of the blockchain network.

How can FIRST's design be further improved to minimize the trust assumptions on the set of verifiers while maintaining the security guarantees

To minimize the trust assumptions on the set of verifiers while maintaining security guarantees, the design of FIRST can be further improved in the following ways:

Decentralized Verification: Implement a decentralized verification process where multiple sets of verifiers independently validate transactions to reduce the reliance on a single group of verifiers. This enhances the robustness of the system against collusion or malicious behavior.

Random Selection: Introduce a random selection mechanism for verifiers to participate in the verification process, ensuring that different subsets of verifiers are chosen for each transaction. This randomness reduces the risk of coordinated attacks by a subset of verifiers.

Transparency and Accountability: Implement transparency measures such as public verifiability of verifiers' actions, audit trails of verification processes, and reputation systems to incentivize honest behavior and deter malicious activities.

Continuous Monitoring: Establish mechanisms for continuous monitoring and auditing of verifiers' actions to detect any anomalies or deviations from the protocol. This proactive approach enhances the security posture of FIRST and maintains trust in the verification process.

By incorporating these enhancements, FIRST can further reduce trust assumptions on verifiers while upholding the security and integrity of the system.