Crypto: Flash Freezing Flash Boys: Per-transaction Encryption To Fight...

Flash Freezing Flash Boys is a novel proposal for per-transaction encryption to prevent frontrunning.

Malicious MEV attacks pose a significant threat to traders on Ethereum. Our latest research shows that almost 2,000 sandwich attacks happen daily and more than $2 million is extracted from the network each month. Even traders who execute large WETH, WBTC or stable swaps remain at risk and can lose a substantial portion of their trades.

MEV thrives because of the transparent nature of blockchains, where transaction data is visible before transactions are executed and finalized. One path toward mitigating MEV is mempool encryption, particularly through the use of threshold encryption. In our earlier articles, we examined two different models for threshold-encrypted mempools. Shutter, one of the first projects to apply threshold encryption to protect the mempool, introduced a per-epoch setup. Batched threshold encryption (BTE), a newer model, decrypts multiple transactions with a single key to reduce communication costs and raise throughput.

In this piece, we analyze Flash Freezing Flash Boys (F3B) by H. Zhang et al. (2022), a newly proposed threshold encryption design that applies encryption on a per-transaction basis. We explore its mechanics, explain its scaling properties as concerns latency and memory, and discuss the reasons it has not yet been deployed in practice.

Flash Freezing Flash Boys addresses limitations in early threshold encryption systems that relied on per-epoch setups. Projects such as FairBlock and the early versions of Shutter used a single key to encrypt every transaction within a selected epoch. An epoch is a fixed number of blocks, e.g., 32 blocks on Ethereum. This created a vulnerability where some transactions that fail to be included in the specified block ends would still be decrypted with the rest of the batch. This would expose sensitive data and open up MEV opportunities to validators, thus making them vulnerable to front-running.

F3B applies threshold encryption on a per-transaction basis, which ensures that each transaction remains confidential until it reaches finality. The general flow of the F3B protocol is shown in the figure below. The user encrypts the transaction with a key that only the designated threshold committee, known as the Secret Management Committee (SMC), can access. The transaction ciphertext and the encrypted key are sent to the consensus group as a pair (Step 1). Thus, nodes can store and order trans

Source: CoinTelegraph