FairBlock: Preventing Blockchain Front-running with Minimal Overheads

Abstract

While blockchain systems are quickly gaining popularity, front-running remains a major obstacle to fair exchange. Front-running is a family of strategies in which a malicious party manipulates the order of transactions such that a transaction tx_2 which is broadcasted in time t_2 executes before the transaction of victim tx_1 which is broadcasted earlier in time t_1 (t_1 < t_2). In this thesis, we show how to apply Identity-Based Encryption (IBE) to prevent front-running with minimal bandwidth overheads. In our approach, to decrypt a block of N transactions, the number of messages sent across the network only grows linearly with the size of decrypting committees, S. That is, to decrypt a set of N transactions sequenced at a specific block, a committee only needs to exchange S decryption shares (independent of N). In comparison, previous solutions are based on threshold decryption schemes, where each transaction in a block must be decrypted separately by the committee, resulting in bandwidth overhead of N*S. Along the way, we present a model for fair block processing, explore technical challenges, and build prototype implementations. We show that on a sample of 1000 messages with 1000 validators our work saves 42.53 MB of bandwidth which is 99.6% less compared with the standard threshold decryption paradigm.