Agoric Talks, 1 Feb 2020

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From YouTube: Offer Safety: Partitioning Risk in Smart Contracts || Kate Sills from Agoric at CodeX Stanford Mtg

Description

Kate Sills from Agoric presented Zoe, Agoric's framework for building smart contracts, including building mechanisms such as auctions, swaps, and decentralized exchanges. Zoe guarantees that users of a smart contract will either get what they said they wanted or get a full refund, even if the smart contract is buggy or malicious.

https://agoric.com/documentation/zoe/guide/

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A

Broad spectrum of electronic rights, both fungible non-funded, all exclusive shared and others and I'll- tell you: okay, alright,.

B

Well, thank you so much for that intro. So I'm actually going to be talking about something today that builds on top of the RTP at the time that I think we were signing up for this. We weren't able to publicly talk about this, so I'm really excited to share it with you guys now, but what I'm talking about is adding a layer of safety to smart contracts that we haven't seen before, and we call that offer safety C all right.

B

So just to give some context, you might be familiar with smart contracts that build on etherium in solidity, on top of the EVM, something like that, we are not doing that we're building on top of the cosmos Network and they use the tender mint consensus algorithm so just to provide some context. This is this: is the Agora stack so we're not on etherium alright, so today, I'll be talking about that top part of the Agora stack, which is the user defined contracts Zoe, which I'll explain and eat RTP, which she just heard about?

B

Okay. So what is a smart contract? We kind of have a different perspective when you might have heard so. We define a smart contract as a contract like arrangement expressed in code where the behavior of the program enforces the terms of the contract, so I think there's there's two important things here. One is that by a smart contract we don't merely mean code that runs on a blockchain. We actually mean something more than that and then secondly, by smart contract we don't mean a legal contract. Necessarily we think that's a separate definition.

B

Okay, so so, let's get into it. So if you're familiar with ERC 20 tokens on aetherium ERC 20 tokens enable one-way payments. So you know you just want to pay someone and the ERC 20 tokens. They have a ledger or registry within the code. That defines that token, so I've kind of tried to replicate that here.

B

It's very simplistic, so you know bear with me, but let's say that Alice has a digital asset, let's call that X and she wants to transfer it to Bob so in the industry or the ledger here on the right now, bob has expert very simple all right. So let's say that the payment is actually conditional. Let's say that alice only wants to give X to Bob if Bob gives Y to Alice right. So let's say Alice does the exchange first, but then we have the problem right.

B

So at time t1 bob has x and y meaning that he could walk away with both and I'm sure you're familiar with this right. It goes back to Hobbs, right 1600s, saying that the person who performs first has no assurance that the other will perform after because the bonds words are too weak, Oliver Williamson built on this point. He called this an example of opportunism or self-interest seeking with Kyle and then Anthony crewmen, going back to Hobbes labelled this situation, transactional insecurity.

B

So we kind of know that this is a societal problem that we need to solve and it's traditionally been solved by legal contracts or the legal system.

B

Okay, so smart contracts solve this problem of transactional insecurity, and this is really really cool. So if we introduce a smart contract instead of Alice, giving X to Bob, Alice and Bob can both put their assets in the smart contract. So this is gonna sound a little strange, but if you look at the the registry of their ledger to the right, you can see that at least in code the smart contract is holding an assets in the same way that Alice and Bob are holding assets. So Alice's address has X at time.

B

T zero Bob's address has y at time T zero at time. T1.

B

The smart contract address is now the whatever you want to call it: the holder of the digital assets, and so whether this, whether this is actually legal ownership, is a question I'll leave for you all I'm, not the expert there, but what's really really cool is that if we give the assets to the smart contract and effectively kind of put it in escrow, Alice and Bob never have access to both x and y, and so we've solved the problem of transactional and security, and so so we fulfilled the exchange safely. So that's great.

B

The problem is, as you might have noticed, the smart contract is holding all the assets now. So what? If that smart contract is buggy or malicious right- and this is actually a huge problem- so there's this great paper called a greedy prodigal and suicidal contracts at scale and I- know great names right. So so they defined these.

B

These three identifiers of contracts that are probably problematic in the etherium world, so greedy, they defined as locked locks up the digital assets and definitely prodigal is sending additional assets to an arbitrary user, one that you haven't seen before probably- and this is most likely an attacker or some kind of mistake- suicidal this is specific to aetherium, but this means that the contract invoked the quote suicide instruction as part of the EDM, meaning that the contract basically deletes itself.

B

So they analyzed nearly a million contracts. They found that quite a few of them were vulnerable to one or more of these issues, and what was really cool was that they were using symbolic execution to do this search. They were, you know they were using machines to do the search and they found a parody book that had already been found, but that you know they were able to find it using this method and that parody book had locked up a hundred million dollars worth in ether.

B

So we're talking about hundreds of millions of dollars worth of problems here in the smart contract space, okay. So that was the idea behind Zoe and I think you're actually wearing the same outfit.

B

So Marcus Miller who's, attic org with us, came up with this idea and given that, if the digital assets are locked up in a smart contract- and you know that causes all these problems well, what if there was a way that the smart contract wasn't actually holding the digital assets, and this is the idea behind what we call Zoe.

B

So what we're doing here is we're trying to partition the risk and contracts. So there's really two roles. The first role is s growing and reap distributing digital assets, and then the second role is deciding how the digital asset should be redistributed. So I'll kind of explain what that means. So so by escrow I mean this means you know taking all the visual assets and holding them right, and so that's what our framework, which we call Zoe, does and then for the second role.

B

This is where your custom behavior or your complex business logic comes in. So this might be, as we saw in the example just a simple swap, it may be an option. It may be a digital exchange with the order book. It may be some complex mechanism design. It may be a negotiated contract that actually kind of looks more like the legal contract whatever it is that you want that logic to be that's where the decision of how the digital asset should be redistributed would go.

B

So when we go back to conditional payments, we call those offers and offers defined as saying what you want and then saying what you are willing to offer in exchange. So going back to our example, Alice was willing to offer X and she wanted Y in return. Bob was willing to offer Y and he wanted X in return. So this seems very simple and very obvious, but the really cool thing is that what you have users define things in terms of offers.

B

Then we can enforce this new principle, this new safety principle that we call offer safety and under offer safety a user is guaranteed to either get what they stated. They wanted or get a full refund of what they offers and connected to offer. Safety is another kind of CS principle that we call payout liveness, and this says that a user is guaranteed to get a payout in a timely manner. According to the conditions under which they made their offer okay, so how does this actually work?

B

So I have kind of a very high-level diagram here, so we have the parties to the smart contract on the left here and they exchange digital assets with Zoe, so the escrow mean they escrow their digital assets with Zoe the parties are able to talk to the smart contract. The smart contract is able to talk to Zoey, but importantly, the smart contract never actually gets asset gets access to the digital assets.

B

So, let's, let's walk through this with. Let's say that we are making a bid on an auction, so let's first escrow our goods with Zoey, then we'll tell the smart contract hey. You know, I put these in escrow I'd like to make a bid on this auction. Then the smart contract may send us information back saying. Like yes, I've accepted your offer whatever it is. This is up to this. The.

C

The that is both assets, there's an X, there's a red X that notation mean that that Zoey has received both assets, one from each party or that he's received an offer for one party. Well, one of those is what they're saying as well all.

B

Right I think I'm doing this much more abstractly, so you can think of the X is what x and y is kind of the general idea of assets yeah, nothing, nothing as specific as what you're talking about yeah all right, so so the Smurf contract. Can you know we'll say you know: we've accepted the offer whatever it is that that contract wants to say and then the contract does its own custom behavior. So, in the case of an auction, it may hold the bids, and you know until maybe it gets a certain number of its.

B

You know three or something like that, or maybe until a certain deadline has been met, but once the smart contract decides to close the auction, then we'll try to reallocate the digital assets. So this is the very important part where offer safety comes in, so the smart contract call Zoey and tells it to reallocate, with certain information saying give this to this person. Give this to this person.

B

Zoey does a check of offer safety and if, if offer safety isn't met, if everyone will actually either get what they said, they wanted or get a full refund back then Zoey rejects this reallocation, so Zoey is actually protecting the parties from malicious behavior by the spirt contract. In this regard, so if the reallocation passes, offer safety and all of the other invariants, then the smart contract and say complete the offers, and this will actually result in a payout to the parties and that's where the transfer of the digital assets occurs.

B

So you can see kind of throughout this whole process.

B

Then smart contracts never actually had access to any of the digital assets. The users were protected against malicious behavior by the smart contract for that by that and then also Zoe additionally protected the parties by enforcing offer safety. So this may seem very simple, but it's actually I think it's going to be really amazing, because we're gonna be able to enable very rapid innovation in smart contracts.

B

You know we can have people who aren't necessarily expert programmers, be building these smart contracts and clothing entirely new things that we haven't seen before new types of dau is what have you and, at the same time, we'll be able to protect the users from malicious or just poorly written code, so so that's kind of the overview of Zoe and if you're interested in some resources, all of our stuff is written in JavaScript. So this is actually a JavaScript package if you're familiar with that, you can install it right now.

B

This is kind of the pre-alpha version, so we're still working on it. We have documentation and if you're interested, you can take a look at the code. So that's that's pretty much it. So. Thank you. So much I'm happy to take questions at the end. Sometime.

A

Great open up learn for questions so who is who's in control of the logic that goes into is Zoe something I'm trying to.

C

Be about where.

A

The safety comes from right, so I mean so far as the average user. Probably can't self-audit. That's my contract. There seems to be that same kind of trust problem with unless they can write their own logic. Great.

B

Great so you're right, the the user is trusting Zoe to a great extent. We think there's still significant.

B

We still think this is a significant benefit to the user, though, because they only have to look at the Zoe code once because it can't be easily changed straight, and so so once they're assured that the Zoe code does that what they want, then they can interact with these smart contracts that maybe they don't they haven't, looked at it as much. They don't trust as much and the worst that can happen is that they'll get a refund back if things misbehave.

B

So so that's actually a very good point so to point out, like the the smart contract, can still be malicious. In that, let's say it's an auction, it could award the wrong person. As you know the item as the winner it could. It could do something really strange and not do an auction thing at all, but what it can't do is steal everyone's funds, so which has been the huge problem, the million dollar problem. It's.

A

Like a distraction late or is it almost like courts into a bunch of different smart.

A

This is kind of a global, slightly basic question, but by having Zoey in the entire ecosystem, does that also allow you to have a simpler, smaller contractors? You're not trying to program for every single.

B

Yes, yes, definitely um so I've been written, I've been writing I think we have like maybe five or so just example: smart contracts like an auction, a swap a covered call which would be like a financial option. Things like that and I would say it's it's analogous to having like a payment service provider in e-commerce, whereas, like you know, if you just want to have your Etsy site or something you don't have to deal with, handling all the credit card payments and things like that.

B

So if you're, if you just want it, you have a good idea for a smart contract. You just want to write that you don't have to deal with all the messiness of making sure that you're s growing the payments correctly, you know dealing with people's funds. Things like that. You can just write the particular business logic for that smart contract and really focus on that and that's hard enough. You don't need to focus on all of the rest of the escrow yeah.

A

So you can really think of Zoe as an escrow and an audit tool combined, I think.

B

You could say that yeah.

C

So I just learned drill down there. What do you mean by watters so.

A

Thank you great point. I meant the offer checking so the offer validation I consider that sort of an audit of the smart contract so he's I'm, totally non-technical, so I could be way off base, but so.

C

I the reason why it's like for a couple years, an audit is what it is as I understand. It is normally talking about looking into the past and what had happened as opposed to enforcing constraints. What can happen? I say.

A

Yeah I mean, if you think about it in the forensic sense of yeah kind of past history, yeah I was thinking like a white quality checking.

A

It looks like we have so Dongsheng I may not pronounce that correctly. The prerequisite for Zoe is ownership must be digitally controllable.

A

B

That's that's correct, so so Zoe can only control digital assets. So so right now that's pretty limited, but you know that still covers all of the crypto currencies, any kind of financial assets that you can express digitally things like that. So anything that is physical, that may have a digital representation. There's still the problem of figuring out how to have enforcement on the fiscal level that matches the enforcement on the additional level. So so that is definitely a prerequisite. You're right, yeah.

C

It's a separate problem: it's a problem with or without Zoey and Zoey, neither contributes nor contributes to solving the problems or doesn't contribute to making the problem worse. It's just sort of a flogging problem, mm-hmm.

A

From a user experience standpoint, would there be kind of like a different set of problems for like? What's they stealin like fifty million dollars, rather than like a simple $50 transaction like maybe just like, suggesting that the user kind of more carefully review, Zoey and the actual smart contact self or is it kind of like a universal uniform expansion? Yeah.

B

Yeah I think that's a very good question so so far everything that I've been mentioning is purely at the code API level, but you can imagine that at the user level your wallet might be attuned to things like that. Saying, like you know, but hey you're, making a million dollar transaction. Are you sure you don't want to do this? Listen this first to check it. So so we don't account for that. But that's because this is very little.

A

Any more questions and I think Roland have said: happy holidays, everyone. So maybe that's.

A

Well, thank you so much.

A

In the New Year, thank you. Okay, next year,.

B

A

B

Bye, thank you bye. Everyone.