FairMM: A Fast and Frontrunning-Resistant Crypto Market-Maker

Michele Ciampi, Muhammad Ishaq*, Malik Magdon-Ismail, Rafail Ostrovsky, Vassilis Zikas

*Corresponding author for this work

Research output: Chapter in Book/Report/Conference proceedingConference contribution

Abstract / Description of output

Frontrunning is a major problem in DeFi applications, such as blockchain-based exchanges. Albeit, existing solutions are not practical and/or they make external trust assumptions. In this work we propose a market-maker-based crypto-token exchange, which is both more efficient than existing solutions and offers provable resistance to frontrunning attack. Our approach combines in a clever way a game theoretic analysis of market-makers with new cryptography and blockchain tools to defend against all three ways by which an exchange might front-run, i.e., (1) reorder trade requests, (2) adaptively drop trade requests, and (3) adaptively insert (its own) trade requests. Concretely, we propose novel light-weight cryptographic tools and smart-contract-enforced incentives to eliminate reordering attacks and ensure that dropping requests have to be oblivious (uninformed) of the actual trade. We then prove that with these attacks eliminated, a so-called monopolistic market-maker has no longer incentives to add or drop trades. We have implemented and benchmarked our exchange and provide concrete evidence of its advantages over existing solutions.

Original languageEnglish
Title of host publicationCyber Security, Cryptology, and Machine Learning - 6th International Symposium, CSCML 2022, Be'er Sheva, Israel, June 30 – July 1, 2022, Proceedings
EditorsShlomi Dolev, Amnon Meisels, Jonathan Katz
PublisherSpringer, Cham
Pages428-446
Number of pages19
ISBN (Electronic)978-3-031-07689-3
ISBN (Print)978-3-031-07688-6
DOIs
Publication statusPublished - 23 Jun 2022
Event6th International Symposium on Cyber Security Cryptography and Machine Learning, CSCML 2022 - Beer Sheva, Israel
Duration: 30 Jun 20221 Jul 2022

Publication series

NameLecture Notes in Computer Science
PublisherSpringer Cham
Volume13301
ISSN (Print)0302-9743
ISSN (Electronic)1611-3349

Conference

Conference6th International Symposium on Cyber Security Cryptography and Machine Learning, CSCML 2022
Country/TerritoryIsrael
CityBeer Sheva
Period30/06/221/07/22

Keywords / Materials (for Non-textual outputs)

  • Blockchain
  • Fairness
  • Front-running
  • Market maker

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