1. “MinRoot: Candidate Sequential Function for Ethereum VDF” by Dmitry Khovratovich, Mary Maller, and Pratyush Ranjan Tiwari

TLDR:

• In Proof-of-Stake networks, there needs to be a process where a single validator is selected to produce a block at a point in time. Often referred to as leader selection, this has been one of the biggest research areas in the field of distributed consensus given how critical this process is to the security of a cryptonetwork.

• As it is currently implemented, Ethereum uses a simplistic process for leader selection: an algorithm called RanDAO, which selects validators using a pseudorandom function. The biggest drawback of this system is that it requires validators to be known ahead of time. While this system resolves some coordination problems, it also enables a host of new attack vectors, as block producers can collude because they are known ahead of time.

• This paper presents a potential solution to this problem. It proposes using a Verifiable Delay Function (VDF) in the selection process. This function makes it very challenging for validators to know when they will need to produce a block at a point in time, thereby eliminating the collusion issues present in RanDAO.

2. “Throughput Limitation of the Off-chain Payment Networks” by Shayan Hamidi Dehshali, Seyed Mahdi Hosseini, Soheil Zibakhsh Shabgahi, and Behnam Bahrak

TLDR:

• Payment Channel Networks (PCNs) such as the Lightning Network are believed to offer limitless scalability, as transfers operate much like a cash system.

• As we have covered in SCRF in the past, there are structural constraints that may entail an upper bound on Lightning’s transactional throughput.

• This paper provides a model to reason about Lightning’s real throughput in light of limitations related to channel liquidity and path dependence. Using this model, they hypothesize that Lightning’s true throughput is close to 10,000 TPS.

3. “Decentralised Finance and Automated Market Making: Predictable Loss and Optimal Liquidity Provision” by Álvaro Cartea, Fayçal Drissi, and Marcello Monga

TLDR:

• Decentralized Exchanges enable the exchange of cryptoassets to be priced on the basis of a simple constant function. For this reason, they are often referred to as Constant Function Market Makers (CFMMs).

• CFMM are supported by Liquidity Providers (LPs) who allocate their funds into pools of cryptoassets representing each asset in a trading pair. These LPs receive transaction fees for every trade that uses the pool(s) to which they are actively providing liquidity.

• This paper introduces a model to better reason about LP returns using historical data from Uniswap v3. They find that LPs in Uniswap v3 have historically traded at a significant loss, which may entail a reevaluation of how these protocols are implemented.

4. “Powers-of-Tau to the People: Decentralizing Setup Ceremonies” by Valeria Nikolaenko, Sam Ragsdale, Joseph Bonneau, and Dan Boneh

TLDR:

• The intersection of Zero Knowledge Proofs (ZKPs) and smart contracts is one the most exciting research fields in the industry given the potential to improve the efficiency, scalability, and privacy assurances of smart contracts.

• Recently, many papers have come out proposing the retrofitting of Ethereum’s execution environment, the Ethereum Virtual Machine (EVM), into well-known zkSNARK schemes, such as Groth16.

• This paper takes a different approach, as it evaluates how such zkSNARKs can be used within WebAssembly (WASM), a new and more widely adopted execution environment.

Research collected and curated by @cipherix.

This newsletter is for informational purposes only and is not intended as legal, business, investment, or tax advice.

The Smart Contract Research Forum’s (SCRF) bold mission is to advance web3 through actionable research and knowledge-sharing. To this end, SCRF connects researchers and builders, sponsors projects, and constructs collaborative forums. SCRF’s community is an active, international network of academics, industry architects, and blockchain advocates.

1. “MinRoot: Candidate Sequential Function for Ethereum VDF” by Dmitry Khovratovich, Mary Maller, and Pratyush Ranjan Tiwari

TLDR:

• In Proof-of-Stake networks, there needs to be a process where a single validator is selected to produce a block at a point in time. Often referred to as leader selection, this has been one of the biggest research areas in the field of distributed consensus given how critical this process is to the security of a cryptonetwork.

• As it is currently implemented, Ethereum uses a simplistic process for leader selection: an algorithm called RanDAO, which selects validators using a pseudorandom function. The biggest drawback of this system is that it requires validators to be known ahead of time. While this system resolves some coordination problems, it also enables a host of new attack vectors, as block producers can collude because they are known ahead of time.

• This paper presents a potential solution to this problem. It proposes using a Verifiable Delay Function (VDF) in the selection process. This function makes it very challenging for validators to know when they will need to produce a block at a point in time, thereby eliminating the collusion issues present in RanDAO.

2. “Throughput Limitation of the Off-chain Payment Networks” by Shayan Hamidi Dehshali, Seyed Mahdi Hosseini, Soheil Zibakhsh Shabgahi, and Behnam Bahrak

TLDR:

• Payment Channel Networks (PCNs) such as the Lightning Network are believed to offer limitless scalability, as transfers operate much like a cash system.

• As we have covered in SCRF in the past, there are structural constraints that may entail an upper bound on Lightning’s transactional throughput.

• This paper provides a model to reason about Lightning’s real throughput in light of limitations related to channel liquidity and path dependence. Using this model, they hypothesize that Lightning’s true throughput is close to 10,000 TPS.

3. “Decentralised Finance and Automated Market Making: Predictable Loss and Optimal Liquidity Provision” by Álvaro Cartea, Fayçal Drissi, and Marcello Monga

TLDR:

• Decentralized Exchanges enable the exchange of cryptoassets to be priced on the basis of a simple constant function. For this reason, they are often referred to as Constant Function Market Makers (CFMMs).

• CFMM are supported by Liquidity Providers (LPs) who allocate their funds into pools of cryptoassets representing each asset in a trading pair. These LPs receive transaction fees for every trade that uses the pool(s) to which they are actively providing liquidity.

• This paper introduces a model to better reason about LP returns using historical data from Uniswap v3. They find that LPs in Uniswap v3 have historically traded at a significant loss, which may entail a reevaluation of how these protocols are implemented.

4. “Powers-of-Tau to the People: Decentralizing Setup Ceremonies” by Valeria Nikolaenko, Sam Ragsdale, Joseph Bonneau, and Dan Boneh

TLDR:

• The intersection of Zero Knowledge Proofs (ZKPs) and smart contracts is one the most exciting research fields in the industry given the potential to improve the efficiency, scalability, and privacy assurances of smart contracts.

• Recently, many papers have come out proposing the retrofitting of Ethereum’s execution environment, the Ethereum Virtual Machine (EVM), into well-known zkSNARK schemes, such as Groth16.

• This paper takes a different approach, as it evaluates how such zkSNARKs can be used within WebAssembly (WASM), a new and more widely adopted execution environment.

Research collected and curated by @cipherix.

This newsletter is for informational purposes only and is not intended as legal, business, investment, or tax advice.

The Smart Contract Research Forum’s (SCRF) bold mission is to advance web3 through actionable research and knowledge-sharing. To this end, SCRF connects researchers and builders, sponsors projects, and constructs collaborative forums. SCRF’s community is an active, international network of academics, industry architects, and blockchain advocates.