Time locked Michelson against Block Producer Extractable Value

Block Producer Extractable Value

We aim at tackling the issue known through the unfortunate misnomer of “generalized front running”, described for instance in here.

Observing a transaction before it is actually included in the chain can give an advantage to a trader against another one. Ultimately, this means block producers can extract a rent from the system as they have the ability to choose and order transactions in a block. This is sometimes referred to, in proof-of-work networks like Ethereum as Miner Extractable Value or MEV for shorts. We refer to it as BPEV, for “Block producer extractable value” or “Baker pecuniary extractable value”, at the reader’s preference. We also note that the term “front-running” is regrettable as it can mislead people into thinking there is a fiduciary relationship between block producers and transaction emitters where, in fact, none exists unless explicitly contracted into.

For example, upon receiving a transaction, a baker could craft a block including this transaction and one of his such that the sequential execution of these two transactions guarantees a gain to the baker.

Timelock

We propose a solution to alleviate this issue which is relatively easy to implement and is based on time lock encryption (see Timelock puzzles and timed release Crypto for more details).

Time lock encryption allows to encrypt a message such that it can be decrypted in two ways. Either the author of the ciphertext produces a plaintext (and a proof of correct decryption) by providing a secret trapdoor (the factorization of an RSA modulus in our case). Otherwise a sequential computation can decrypt the ciphertext after a computation requiring T sequential operations (modular squaring in our case), for some pre-determined constant T.

In addition, a proof of the correctness of the decryption can also be produced and checked in sub linear time (log T in our case).

By experimentally measuring the time the sequential operation takes on available hardware using optimized implementation, we can estimate a rough conversion (or a bound in our case) between the constant T and wall clock time. We also note that the VDF alliance has been working on producing an ASIC for squaring in an RSA group to ensure a level playing field in terms of computational speed.

An implementation of the timelock puzzle and proof scheme is available in src/lib_crypto/timelock.mli inspired from a proof of concept available here.

General principle

To limit BPEV, we introduce in Michelson an opcode (OPEN_CHEST) and two types (chest and chest_key) allowing timelock-encrypted values to be used inside a Michelson contract.

The typical usage pattern would be as follows:

  1. In a first period, a contract collects user-submitted and timelock encrypted Michelson values along with some valuable deposit, such as tez.

  2. In a second period, after the values are collected, the contract collects from users a decryption of the value they submitted alongside with a proof that the decryption is correct.

  3. In a third period, if any value remains undecrypted, anyone can claim part of the deposit by submitting a decryption of the value, with the other part of the deposit being burnt. Different penalties can be assessed depending on whether the user merely failed to submit a decryption for their value, or if they also intentionally encrypted invalid data. Different rewards can be distributed for submitting a correct decryption. The third period needs to be long enough so that people have enough time to perform the timelock decryption.

  4. Finally, the contract can compute some function of all the decrypted data.

There is generally no incentive for users not to provide the decryption of their data and thus the third period generally does not need to take place. However, the second period needs to be long enough so that bakers cannot easily censor submission of the decryption in a bid to later claim the reward. Burning a part of the deposit also limits grieving attacks where a user gets back their whole deposit by providing the decryption, but in a way that delays everyone else.

Cryptographic principles

Users first generate a RSA modulus and a symmetric encryption key. They use authenticated encryption to encrypt a packed Michelson value (an array of bytes computed with PACK) and encrypt that encryption key using a timelock puzzle. They then combine the RSA modulus, the timelocked symmetric key, the constant T and the encrypted value as a single value as well (called chest in our library in src/lib_crypto).

A proof of decryption can be the symmetric key itself. However, a malicious user could propose an authenticated ciphertext that does yield a valid value even when decrypted with the symmetric key that was indeed time locked. To avoid this threat, an opening (called the chest_key in our library) includes the symmetric key and a proof that the symmetric key proposed is indeed the one hidden in the timelock puzzle. In this way we can differentiate whether the chest or the chest key was proposed by a malicious user.

Finally, our library exposes an open_chest function taking a chest, a chest key and produces either the underlying plaintext or indicates that the chest or the chest key is malicious.

Proposed opcode and types

To expose the features added by our library, we introduce the following Michelson types:

  • chest, which represents timelocked arbitrary bytes with the necessary public parameters to open it.

  • chest_key, which represents the decryption key, alongside with a proof that the key is correct.

and the following opcode:

unlock ::  chest_key chest time →or (bytes, bool)

If everything is correct it pushes Left bytes on top of the stack where bytes are cryptographically guaranteed to be the bytes the chest provider timelocked. If the ciphertext does not decrypt under the symmetric key that was timelocked, it pushes on the stack Right False If the provided symmetric key was not the one timelocked (which we detect thanks to the timelock proof), it pushes on the stack Right True. Note that we are using an authenticated encryption scheme, so we can detect if someone provides a wrong key while fooling the time lock proof. This is doable only by someone knowing the factorisation of the RSA modulus. However, this cannot prevent someone from encrypting a wrong key, or putting a wrong message authentication code, so this is why we still need the proof of correctness.