DeCenter Seminar: How Cryptographic Proofs are Transforming the Decentralized Web
May 8, 2024 4:30 pm
Computer Science Building, 105
Speaker: Ben Fisch, Yale University
Abstract:
Ethereum, along with a growing number of decentralized virtual machines, hosts thousands of applications (dapps) that are updated synchronously and secured by a common consensus protocol. These characteristics have made these platforms particularly suitable for financial use cases, where users move funds in and out of dapps for trading, lending, payments, liquidity provision, and more. Users of Ethereum can interact with many dapps at once, such as receiving a loan and executing a trade in a single transaction (aka flash loan), without needing to trust anyone beyond Ethereum’s consensus for the safety of their funds.
This shared infrastructure across dapps, however, has several downsides. Ethereum’s fixed transaction throughput creates a scaling bottleneck. An activity spike in one application can cause congestion, raising transaction prices in all others. Dapps are also forced to use Ethereum’s limited instruction set. Operations (like hash functions) that may be cheaply executed on most modern machines can blow up in complexity post compilation to Ethereum instructions. Lastly, by controlling the ordering of transactions, Ethereum’s operators profit through frontrunning or arbitrage — behavior which dapp creators may either want to prevent entirely or capture value from on their own.
Today, cryptographic proof systems are enabling dapps to address these issues by moving their transaction processing off Ethereum while still inheriting Ethereum’s security. Dedicated dapp servers (called “rollup sequencers”) collect, order, and execute large batches of transactions on their own, periodically posting only the resulting state change and a cryptographic proof of its correctness to Ethereum for verification. While this may limit users’ ability to interact synchronously with multiple dapps (e.g., for a flash loan), further reductions in the latency and cost of cryptographic proofs will re-enable atomic cross-dapp transactions. This new paradigm has also lead to new mechanism design challenges, such as how to optimize and share cross-dapp revenue, or how to outsource cryptographic proof generation and appropriately price transactions to cover these costs.
This talk will be a general presentation of this evolution and discussion of these open challenges. I will also highlight recent developments in low-latency cryptographic proofs.
Bio:
Ben Fisch is an assistant professor of computer science at Yale University and co-director of the Yale Applied Cryptography Lab. His research centers around cryptographic proofs and decentralized systems, but broadly spans topics within privacy and verifiability. Prior to Yale, he completed his PhD at Stanford University. His thesis work included Proofs of Replication and Verifiable Delay Functions, which were influential in the designs of real-world decentralized systems, including Filecoin, Chia, and Ethereum. More recently, he co-founded Espresso Systems, which is improving the decentralization, security, and interoperability of “Layer-2” applications.