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CeFi vs. DeFi -- Comparing Centralized to Decentralized Finance
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In this work, a structured methodology is provided to differentiate between a CeFi and a DeFi service, and it is shown that certain DeFi assets do not necessarily classify as CeFi assets, and may endanger the economic security of intertwined DeFi protocols.Abstract:
To non-experts, the traditional Centralized Finance (CeFi) ecosystem may seem obscure, because users are typically not aware of the underlying rules or agreements of financial assets and products. Decentralized Finance (DeFi), however, is making its debut as an ecosystem claiming to offer transparency and control, which are partially attributable to the underlying integrity-protected blockchain, as well as currently higher financial asset yields than CeFi. Yet, the boundaries between CeFi and DeFi may not be always so clear cut. In this work, we systematically analyze the differences between CeFi and DeFi, covering legal, economic, security, privacy and market manipulation. We provide a structured methodology to differentiate between a CeFi and a DeFi service. Our findings show that certain DeFi assets (such as USDC or USDT stablecoins) do not necessarily classify as DeFi assets, and may endanger the economic security of intertwined DeFi protocols. We conclude this work with the exploration of possible synergies between CeFi and DeFi.read more
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On the Security and Performance of Proof of Work Blockchains
TL;DR: In this article, the authors introduce a quantitative framework to analyze the security and performance implications of various consensus and network parameters of PoW blockchains, and devise optimal adversarial strategies for double-spending and selfish mining.
Proceedings ArticleDOI
SoK: Decentralized Finance (DeFi) Attacks
Liyi Zhou,Xihan Xiong,Jens Ernstberger,Stefanos Chaliasos,Zhipeng Wang,Ye Wang,Kaihua Qin,Roger Wattenhofer,Dawn Song,Arthur Gervais +9 more
TL;DR: A common reference frame is introduced to systematically evaluate and compare DeFi incidents, including both attacks and accidents, and investigates 77 academic papers, 30 audit reports, and 181 real-world incidents.
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Blockchain Stretching & Squeezing: Manipulating Time for Your Best Interest
TL;DR: An interesting application of these manipulations is to create an artificial interest-rate gap between loans taken from one DeFi platform which accrues interest according to block height and deposited in some other platform that does so according to elapsed time, which provides a large incentive for miners to deviate.
Journal ArticleDOI
A Review of Blockchain in Fintech: Taxonomy, Challenges, and Future Directions
TL;DR: The goal is to compile a list of open research challenges related to various aspects of the blockchain’s protocol and application layers and provide a clear understanding of the applications for which blockchain can be valuable, as well as the risks associated with its use in parallel.
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Proceedings ArticleDOI
On the Security and Performance of Proof of Work Blockchains
TL;DR: This paper introduces a novel quantitative framework to analyse the security and performance implications of various consensus and network parameters of PoW blockchains and devise optimal adversarial strategies for double-spending and selfish mining while taking into account real world constraints.
Journal ArticleDOI
A survey on the security of blockchain systems
TL;DR: Wang et al. as discussed by the authors conduct a systematic study on the security threats to blockchain and survey the corresponding real attacks by examining popular blockchain systems. And they also review the security enhancement solutions for blockchain, which could be used in the development of various blockchain systems, and suggest some future directions to stir research efforts into this area.
Proceedings ArticleDOI
Zerocoin: Anonymous Distributed E-Cash from Bitcoin
TL;DR: Zerocoin is proposed, a cryptographic extension to Bitcoin that augments the protocol to allow for fully anonymous currency transactions and uses standard cryptographic assumptions and does not introduce new trusted parties or otherwise change the security model of Bitcoin.
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Majority is not Enough: Bitcoin Mining is Vulnerable
Ittay Eyal,Emin Gün Sirer +1 more
TL;DR: In this paper, the authors show that the Bitcoin protocol is not incentive-compatible and present an attack with which colluding miners obtain a revenue larger than their fair share, which can have significant consequences for Bitcoin: Rational miners will prefer to join the selfish miners, and the colluding group will increase in size until it becomes a majority.
Proceedings ArticleDOI
Do you Need a Blockchain
Karl Wüst,Arthur Gervais +1 more
TL;DR: This paper critically analyze whether a blockchain is indeed the appropriate technical solution for a particular application scenario, and distinguishes between permissionless and permissioned blockchains and contrast their properties to those of a centrally managed database.