Trust is Risk
A decentralized financial trust platform
Orfeas Stefanos Thyfronitis Litos
Dionysis Zindros
Financial Cryptography 2017
Motivation
 Decentralized marketplaces, e.g. OpenBazaar:
 Anonymous purchases (can't call the cops!)

Can't just have simple stars + ratings!

Adversary can create 1,000,000 accounts (Sybil)

...and 1,000,000 fake "good transactions"

Adversary can create 1,000,000 accounts (Sybil)

Can we build it without fees?

We need decentralized reputation
An example purchase
Buyer  Dave
Vendor  Carol
Bob wants to buy sneakers from Alice
But who sends first?
Can't just use escrow: How to trust escrow?
A new type of wallet
You trust your money to your friends
You risk 60m฿ in exchange for being part of the network.
Bob: 24m฿
Charlie: 36m฿
Bob: 22m฿
Vendor: 6m฿
Charlie: 32m฿
Funds are redistributed
Your wallet decides how
1of2 Multisig

How does Alice trust Bob & Charlie?

Puts her money in 1of2 multisigs

1 / {Alice, Bob}

1 / {Alice, Charlie}

Example:
Alice trusts Bob with 5m฿. Both Alice & Bob can spend.
Bitcoin graph
Trust Is Risk graph
Alice trusts Bob will not steal 5m฿ from her.
1of2 multisig
Trust graph
 Player = node
 Direct trust (1of2 multisig) = directed edge
 Weighted & directed graph
Desired properties

Risk Invariance
 Risk exposure to vendor does not increase beyond exposure to friends

Sybil Resilience
Our model
 Players play one after the other (e.g. roundrobin)
 An honest player can:
 Directly entrust coins to friends
 Reclaim previously entrusted coins
 A malicious player additionally can
 Take coins entrusted by others
Turn Example
Indirect Trust intuition
 Alice and Bob are strangers.
 What's the worst that can happen to Alice if Bob is Evil?
 He steals all his incoming direct trust.
 Other players try to minimize losses.
Indirect Trust definition
is the maximum loss Alice can suffer if:
 Bob steals all incoming direct trust and exits the game. (Evil)
 Other players try to make up for their loss. (Conservative)
We call this a Transitive Game.
Trust flow theorem
Treat Direct Trusts as graph capacities.
Proof intuition:
 Every maximum flow corresponds to a Transitive Game with actions replaced by flows
 Every Transitive Game is made up solely of actions that also constitute a valid flow
The Transaction Problem
Client
Vendor
1฿
฿
How to pay the vendor?
...
2฿
...
Trust graph before payment:
฿
Risk exposure before payment: 2฿
How to pay the vendor?
...
2฿
...
Naive idea: just pay the vendor
฿
Risk exposure increased!
How to pay the vendor?
...
1฿
...
Safe idea: redistribute direct trust
฿
Risk exposure decreased!
How to pay the vendor?
...
1฿
...
Now we can safely pay
฿
Risk remained invariant
Risk Invariance theorem
 Alice was trusting her friends willingly
 Alice reduces trust to friends
 She uses that money to pay Vendor
Risk exposure of Alice to Vendor before
=
Risk exposure of Alice to Vendor after
Sybil Attack
Collusion = Corrupted Set ∪ Sybil Set
Corrupted Set: Originally trustworthy players, now compromised by Eve. Honest players may directly trust them.
Sybil Set: Players fabricated by Eve. No honest players directly trust them.
Collusion
Sybil Resilience
Proof intuition:
MaxFlow cannot be increased by adding nodes without incoming direct trusts.
Collusion
It's pointless for an attacker to create multiple accounts!
Thank you!
Questions?
https://github.com/decryptoorg/TrustIsRisk
https://github.com/decryptoorg/TrustIsRisk.js
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