Bitcoin-Enhanced Proof-of-Stake Security: Possibilities and Impossibilities (2207.08392v6)

Abstract: Bitcoin is the most secure blockchain in the world, supported by the immense hash power of its Proof-of-Work miners. Proof-of-Stake chains are energy-efficient, have fast finality but face several security issues: susceptibility to non-slashable long-range safety attacks, low liveness resilience and difficulty to bootstrap from low token valuation. We show that these security issues are inherent in any PoS chain without an external trusted source, and propose a new protocol, Babylon, where an off-the-shelf PoS protocol checkpoints onto Bitcoin to resolve these issues. An impossibility result justifies the optimality of Babylon. A use case of Babylon is to reduce the stake withdrawal delay: our experimental results show that this delay can be reduced from weeks in existing PoS chains to less than 5 hours using Babylon, at a transaction cost of less than 10K USD per annum for posting the checkpoints onto Bitcoin.

• The paper examines leveraging Bitcoin's security via a checkpointing protocol, Babylon, to address key vulnerabilities in Proof-of-Stake systems like long-range attacks and liveness issues.
• The proposed Babylon protocol checkpoints PoS block hashes and validator signatures onto the Bitcoin blockchain, providing verifiable history to enhance slashable safety and liveness resilience.
• Experimental results show that checkpointing on Bitcoin Mainnet is affordable and confirms PoS withdrawal delays from weeks to hours, demonstrating the practical viability of the approach.

An Overview of "Bitcoin-Enhanced Proof-of-Stake Security: Possibilities and Impossibilities"

The paper "Bitcoin-Enhanced Proof-of-Stake Security: Possibilities and Impossibilities" by Tas et al. examines the integration of Proof-of-Stake (PoS) protocols with Bitcoin, aiming to address inherent security issues within PoS blockchains. The authors propose a protocol named Babylon, leveraging Bitcoin to enhance PoS security while assessing the potential and limitations of such an integration.

Background and Motivation

Bitcoin is renowned for its security, primarily due to its Proof-of-Work (PoW) mechanism, which is supported by vast computational power. However, PoW is also criticized for being energy-intensive. Conversely, PoS protocols are more energy-efficient and offer rapid finality but suffer from several vulnerabilities. These include long-range, non-slashable safety attacks, limited liveness resilience, and bootstrapping challenges from low token valuation. This paper explores using Bitcoin as a trusted timestamping service to mitigate these limitations.

Proposed Solution and Theoretical Foundation

The authors propose Babylon, a protocol where an off-the-shelf PoS protocol checkpoints onto Bitcoin. This approach aims to resolve specific security vulnerabilities in PoS systems by providing external validation through Bitcoin's trusted network.

Key to this integration is the checkpointing mechanism, where PoS block hashes and their validator signatures are posted to Bitcoin. This offers a verifiable history that assists clients in resolving conflicting chains and slashing adversarial validators before significant safety violations occur.

Babylon’s design addresses these primary concerns:

1. Slashable Safety: Babylon ensures that safety violations in PoS protocols are computably accountable, implicating the adversaries. By leveraging Bitcoin's immutability, Babylon secures the PoS protocol against posterior corruption attacks, which have been challenging to address without external inputs.
2. Improved Liveness: The protocol enhances liveness by falling back on Bitcoin's consensus mechanisms when adversarial conditions in PoS systems persist, particularly when the adversarial stakeholder fraction is below 50%.
3. Bootstrapping and Finality: Babylon reduces the stake withdrawal delay in PoS chains from weeks to mere hours by using Bitcoin's timestamping, calculated to cost under 10K USD annually for checkpoints. This efficiency is due to Bitcoin's established and stable security model, providing an independent and trustworthy chain for verification.

Experimental Evaluation

Experiments conducted on the Bitcoin Mainnet demonstrated that PoS checkpoints could be posted affordably and confirmed with a latency on the order of a few hours, significantly improving upon current PoS withdrawal delay periods. This reduction in latency underlines the practical viability of Babylon, reinforcing the theoretical claims regarding withdrawal efficiency and cost-effectiveness.

Implications and Future Directions

The integration of PoS and Bitcoin as facilitated by Babylon provides a robust security model unlikely to be achieved by either system independently. It showcases an innovative path forward for achieving scalable and secure blockchain protocols by leveraging existing established systems.

Future explorations might focus on refining the integration to reduce operational costs further, improve the responsiveness of checkpoints, and expand applicability to a broader range of PoS chains. Furthermore, understanding the implications of such integrations on Bitcoin’s network load and potential congestion points represents a vital area for exploration.

Conclusion

The paper makes significant contributions to the understanding of PoS security embellishments through external chains and presents a feasible model with Babylon. It provides a comprehensive account of achieving unified security properties, balancing energy efficiency with high-security considerations. Despite the complexities of hybrid blockchain systems, Babylon is an elegant demonstration of the synergy between decentralized protocols and sets a precedent for further research in blockchain security.