Paper 2021/609

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

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

Abstract

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.

Metadata
Available format(s)
PDF
Publication info
Preprint. Major revision.
Keywords
front-runningmarket-makerblockchainexchange
Contact author(s)
micheleciampi1990 @ gmail com
ishaq @ ishaq pk
magdon @ gmail com
rafail @ cs ucla edu
vzikas @ cs purdue edu
History
2022-03-30: last of 2 revisions
2021-05-17: received
See all versions
Short URL
https://ia.cr/2021/609
License
Creative Commons Attribution
CC BY

BibTeX

@misc{cryptoeprint:2021/609,
      author = {Michele Ciampi and Muhammad Ishaq and Malik Magdon-Ismail and Rafail Ostrovsky and Vassilis Zikas},
      title = {FairMM: A Fast and Frontrunning-Resistant Crypto Market-Maker},
      howpublished = {Cryptology ePrint Archive, Paper 2021/609},
      year = {2021},
      note = {\url{https://eprint.iacr.org/2021/609}},
      url = {https://eprint.iacr.org/2021/609}
}
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