FIRST: Cryptographic Protections Against Smart Contract Frontrunning

Summary

The document explains frontrunning in cryptocurrency applications: an attacker observes pending user transactions and tries to have their own transactions processed first. This can cause financial losses, incorrect outcomes, and greater exposure to attacks, particularly in transparent, unregulated settings that support services such as lending, borrowing, and margin trading.

It proposes FIRST, a framework using verifiable delay functions and aggregate signatures to prevent this attack. The design uses a federated process to generate the VDF public parameters, avoiding reliance on one trusted setup. The authors report a formal security analysis under the Universal Composability framework and experimental evidence of effectiveness. The excerpt does not describe the protocol mechanics, experimental setup, or performance tradeoffs, so it offers no basis for assessing deployment costs or suitability for particular trading systems.

Key ideas

• Frontrunning exploits visibility into transactions that have been submitted but not yet processed.
• The attack can create financial losses and inaccurate transaction outcomes in crypto applications.
• FIRST combines verifiable delay functions with aggregate signatures to defend against frontrunning.
• A federated setup generates public parameters without depending on a single trusted party.
• The authors report formal security analysis and experimental evaluation, but the excerpt omits implementation details and measured tradeoffs.

Tags

# FIRST: FrontrunnIng Resilient Smart ConTracts


# FIRST: FrontrunnIng Resilient Smart ConTracts









Owing to the meteoric rise in the usage of cryptocurrencies, there has been a widespread adaptation of traditional financial applications such as lending, borrowing, margin trading, and more, to the cryptocurrency realm. In some cases, the inherently transparent and unregulated nature of cryptocurrencies leads to attacks on users of these applications. One such attack is frontrunning, where a malicious entity leverages the knowledge of currently unprocessed financial transactions submitted by users and attempts to get its own transaction(s) executed ahead of the unprocessed ones. The consequences of this can be financial loss, inaccurate transactions, and even exposure to more attacks. We propose FIRST, a framework that prevents frontrunning attacks, and is built using cryptographic protocols including verifiable delay functions and aggregate signatures. In our design, we have a federated setup for generating the public parameters of the VDF, thus removing the need for a single trusted setup. We formally analyze FIRST, prove its security using the Universal Composability framework and experimentally demonstrate the effectiveness of FIRST.

Shown in full with attribution under the source's licence. Licence: abstract CC0

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.