Public Lecture

Speaker

Arthur Gervais of Imperial College London, UK

Abstract

Permissionless blockchains such as Bitcoin have excelled at financial services. Yet, opportunistic traders extract monetary value from the mesh of decentralized finance (DeFi) smart contracts through so-called blockchain extractable value (BEV). The recent emergence of centralized BEV relayer portrays BEV as a positive additional revenue source. Because BEV, however, was quantitatively shown to deteriorate the blockchain’s consensus security, BEV relayers endanger the ledger security by incentivizing rational miners to fork the chain. For example, a rational miner with a 10% hashrate will fork Ethereum if a BEV opportunity exceeds 4x the block reward.

In this talk, we quantify the BEV danger by deriving the USD extracted from sandwich attacks, liquidations, and decentralized exchange arbitrage. We estimate that over 32 months, BEV yielded 540.54M USD in profit, divided among 11,289 addresses when capturing 49,691 cryptocurrencies and 60,830 on-chain markets. The highest BEV instance we find amounts to 4.1M USD, 616.6x the Ethereum block reward. Moreover, while the practitioner’s community has discussed the existence of generalized trading bots, we are, to our knowledge, the first to provide a concrete algorithm. Our algorithm can replace unconfirmed transactions without the need to understand the victim transactions’ underlying logic, which we estimate to have yielded a profit of 57,037.32 ETH (35.37M USD) over 32 months of past blockchain data.

Relevant Papers

• Quantifying Blockchain Extractable Value: How dark is the forest? S&P’22
• High-Frequency Trading on Decentralized Exchanges, S&P’21
• On the Just-In-Time Discovery of Profit-Generating Transactions in DeFi Protocols, S&P’21

Hybrid Event

• See above for location details and links
• Or join us via Zoom: tuwien.zoom.us/j/92368176950

About The Lecture Series

ViSP is organizing a Distinguished Lecture Series with internationally renowned researchers from the field of Security & Privacy. Every month there will be a talk on a current research topic, followed by an open discussion.

About ViSP

ViSP, the Vienna Cybersecurity and Privacy Research Center, consists of researchers from IST Austria, TU Wien and Uni Wien. With these three institutes, Vienna offers an exceptional degree of excellence for research in the area of Security and Privacy. The mission of ViSP is to unlock the true potential of the location by fostering collaborations between different institutes in Vienna. This collaboration strives to do impactful research and advance state of the art, securing Vienna’s pioneer role in the research in Security and Privacy.

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