Abstract
A prominent use case of Ethereum smart contracts is the creation of a wide range of user-defined tokens or assets by way of smart contracts. User-defined assets are non-native on Ethereum; i.e., they are not directly supported by the ledger, but require repetitive custom code. This makes them unnecessarily inefficient, expensive, and complex. It also makes them insecure as numerous incidents on Ethereum have demonstrated. Even without stateful smart contracts, the lack of perfect fungibility of Bitcoin assets allows for implementing user-defined tokens as layer-two solutions, which also adds an additional layer of complexity.
In this paper, we explore an alternative design based on Bitcoin-style UTXO ledgers. Instead of introducing general scripting capabilities together with the associated security risks, we propose an extension of the UTXO model, where we replace the accounting structure of a single cryptocurrency with a new structure that manages an unbounded number of user-defined, native tokens, which we call token bundles. Token creation is controlled by forging policy scripts that, just like Bitcoin validator scripts, use a small domain-specific language with bounded computational expressiveness, thus favouring Bitcoin’s security and computational austerity. The resulting approach is lightweight, i.e., custom asset creation and transfer is cheap, and it avoids use of any global state in the form of an asset registry or similar.
The proposed UTXO\(_{\textsf {ma}}\) model and the semantics of the scripting language have been formalised in the Agda proof assistant.
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Notes
- 1.
- 2.
We have chosen to represent \(\textsf {Quantities}\) as a finitely-supported function whose values are themselves finitely-supported functions (in an implementation, this would be a nested map). We did this to make the definition of the rules simpler (in particular Rule 8). However, it could equally well be defined as a finitely-supported function from tuples of \(\textsf {PolicyID}\)s and \(\textsf {Asset}\)s to \(\textsf {Quantity}\)s.
- 3.
The restriction on outputs is enforced by Rule 2. We simply do not impose such a restriction on the \( forge \) field: this lets us define rules in a simpler way, with cleaner notation.
- 4.
KYC stands for “know your customer”, which is the process of verifying a customer’s identity before allowing the customer to use a company’s service.
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Chakravarty, M.M.T. et al. (2020). UTXO\(_{\textsf {ma}}\): UTXO with Multi-asset Support. In: Margaria, T., Steffen, B. (eds) Leveraging Applications of Formal Methods, Verification and Validation: Applications. ISoLA 2020. Lecture Notes in Computer Science(), vol 12478. Springer, Cham. https://doi.org/10.1007/978-3-030-61467-6_8
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