Ripple/Stellar Consensus System May Have Serious Issues

Even though any fork is a matter of concern for a cryptocurrency that works based on the network reaching a consensus for the current state, which prevents double-spend and other attacks, it seems like this fork was related to the underlying consensus mechanism itself, thus making it a more serious issue. Stellar announced these issues in a blog post today.

Known Attack Vectors

It has been previously known that there are theoretical attack vectors against the Ripple/Stellar-style consensus system. Prof. David Mazières of Stanford University, who heads Stanford’s Secure Computing Group had researched this consensus mechanism and concluded that it isn’t safe under all circumstances. Stellar claims to be working with Prof. Mazières to create a new consensus system:

Based [on] these findings, we decided to create a new consensus system with provable correctness. This effort, led by Prof. Mazières, is underway. His white paper and the accompanying code are expected to be released in a few months

In the blog post, Stellar claims that they were uncertain whether the requirements for this failure were realistic. However, it seems like given enough transactions, these conditions can be met. The first disagreement began on Tuesday night, according to Stellar. The network moved from a majority agreed fork to a minority fork, thus invalidating a number of transactions. Even though it’s possible to manually reconcile a lot of transactions, any double-spends during this time cannot be reconciled.

It seems that Stellar has many different number of accounts and transactions, which might have precipitated the emergence of these necessary conditions that breaks down the consensus algorithm.

Our monitoring of the network has made it clear that the underlying Ripple/Stellar consensus system is not performing at this level of scale, which is still small relative to the global financial system. In order for such protocols to perform at real-world levels with the expected degree of safety, this number of accounts should not be a problem.

Current Resolution

To resolve the situation, Stellar is running a single validating node instead of a decentralized network. This means as of right now, the Stellar network is completely centralized with a single node deciding whether a transaction is valid or not. The current network fork issue, however, would go away based on running a single validating node.

The team is also working on modifying the consensus algorithm and get back to a decentralized consensus mechanism. The new system would be provably correct, and will prioritize safety and fault tolerance over guaranteed termination (the current system prioritizes fault tolerance and termination over safety).

Stellar is backed by some of the big names in Silicon Valley, such as the payment processor Stripe and is also backed by Naval Ravikant, the co-founder of AngelList.

Sid is a writer and blogger, with deep interest in Bitcoin and cryptocurrencies. He is the founder of BTC Geek and has several years of experience working in the finance and technology sectors in New York. He can sometimes be seen wandering the streets, trying to photograph the best the city offers.