Cryptology ePrint Archive: Report 2021/598

Proof of Assets in the Diem Blockchain

Panagiotis Chatzigiannis and Konstantinos Chalkias

Abstract: A great challenge for distributed payment systems is their compliance with regulations, such as anti-money laundering, insolvency legislation, countering the financing of terrorism and sanctions laws. After Bitcoin's MtGox scandal, one of the most needed auditing functionalities for financial solvency and tax reporting purposes is to prove ownership of blockchain reserves, a process known as Proof of Assets (PoA). This work formalizes the PoA requirements in account-based blockchains, focusing on the unique hierarchical account structure of the Diem blockchain, formerly known as Libra. In particular, we take into account some unique features of the Diem infrastructure to consider different PoA modes by exploring time-stamping edge cases, cold wallets, locked assets, spending ability delegation and account pruning, among the others. We also propose practical optimizations to the byte-size of PoA in the presence of light clients who cannot run a full node, including skipping Validator updates, while still maintaining the 66.7% Byzantine fault tolerance (BFT) guarantee.

Category / Keywords: applications / Diem blockchain, solvency proofs, light clients

Original Publication (with minor differences): AIBlock workshop - ACNS 2021

Date: received 6 May 2021

Contact author: kostascrypto at fb com, pchatzig at gmu edu, chalkiaskostas at gmail com

Available format(s): PDF | BibTeX Citation

Version: 20210510:083322 (All versions of this report)

Short URL: ia.cr/2021/598