P2DEX: Privacy-Preserving Decentralized Cryptocurrency Exchange

TY - GEN

T1 - P2DEX

T2 - 19th International Conference on Applied Cryptography and Network Security

AU - Baum, Carsten

AU - David, Bernardo

AU - Frederiksen, Tore Kasper

N1 - Conference code: 19

PY - 2021/6

Y1 - 2021/6

N2 - Cryptocurrency exchange services are either trusted central entities that have been routinely hacked (losing over 8 billion USD), or decentralized services that make all orders public before they are settled. The latter allows market participants to “front run” each other, an illegal operation in most jurisdictions. We extend the “Insured MPC” approach of Baum et al. (FC 2020) to construct an efficient universally composable privacy preserving decentralized exchange where a set of servers run private cross-chain exchange order matching in an outsourced manner, while being financially incentivised to behave honestly. Our protocol allows for exchanging assets over multiple public ledgers, given that users have access to a ledger that supports standard public smart contracts. If parties behave honestly, the on-chain complexity of our construction is as low as that of performing the transactions necessary for a centralized exchange. In case malicious behavior is detected, users are automatically refunded by malicious servers at low cost. Thus, an actively corrupted majority can only mount a denial-of-service attack that makes exchanges fail, in which case the servers are publicly identified and punished, while honest clients do not to lose their funds. For the first time in this line of research, we report experimental results on the MPC building block, showing the approach is efficient enough to be used in practice.

AB - Cryptocurrency exchange services are either trusted central entities that have been routinely hacked (losing over 8 billion USD), or decentralized services that make all orders public before they are settled. The latter allows market participants to “front run” each other, an illegal operation in most jurisdictions. We extend the “Insured MPC” approach of Baum et al. (FC 2020) to construct an efficient universally composable privacy preserving decentralized exchange where a set of servers run private cross-chain exchange order matching in an outsourced manner, while being financially incentivised to behave honestly. Our protocol allows for exchanging assets over multiple public ledgers, given that users have access to a ledger that supports standard public smart contracts. If parties behave honestly, the on-chain complexity of our construction is as low as that of performing the transactions necessary for a centralized exchange. In case malicious behavior is detected, users are automatically refunded by malicious servers at low cost. Thus, an actively corrupted majority can only mount a denial-of-service attack that makes exchanges fail, in which case the servers are publicly identified and punished, while honest clients do not to lose their funds. For the first time in this line of research, we report experimental results on the MPC building block, showing the approach is efficient enough to be used in practice.

KW - Blockchain

KW - Front-running

KW - Multiparty computation

KW - Secure asset exchange

UR - https://link.springer.com/chapter/10.1007/978-3-030-78372-3_7

U2 - 10.1007/978-3-030-78372-3_7

DO - 10.1007/978-3-030-78372-3_7

M3 - Article in proceedings

SN - 9783030783716

T3 - Lecture Notes in Computer Science

SP - 163

EP - 194

BT - Applied Cryptography and Network Security - 19th International Conference, ACNS 2021, Proceedings

A2 - Sako, Kazue

A2 - Tippenhauer, Nils Ole

PB - Springer

Y2 - 21 June 2021 through 24 June 2021

ER -