Shorting attack: Predatory, destructive short selling on Proof-of-Stake cryptocurrencies
- Authors
- Lee, Suhyeon; Kim, Seungjoo
- Issue Date
- 2021
- Publisher
- WILEY
- Keywords
- blockchain; Proof-of-Stake; security; short selling
- Citation
- CONCURRENCY AND COMPUTATION-PRACTICE & EXPERIENCE
- Indexed
- SCIE
SCOPUS
- Journal Title
- CONCURRENCY AND COMPUTATION-PRACTICE & EXPERIENCE
- URI
- https://scholar.korea.ac.kr/handle/2021.sw.korea/139489
- DOI
- 10.1002/cpe.6585
- ISSN
- 1532-0626
- Abstract
- Bitcoin introduced blockchain which is the transparent and decentralized way of recording the lists of digital currency transactions. Bitcoin's blockchain uses Proof-of-Work as a Sybil control mechanism. However, PoW wastes energy since it uses hash computing competitions to find a block. Hence, various alternative mechanisms have been proposed. Among them, Proof-of-Stake, which is based on the deposit, has been spotlighted. As opposed to Proof-of-Work, Proof-of-Stake requires nodes to have a certain amount of tokens (stake) in order to qualify to validate blocks. The "one-sentence philosophy" of proof of stake is not "security comes from burning energy," but rather "security comes from putting up economic value-at-loss." In this article, contrary to popular belief, we point out that this value-at-loss can be hedged by short selling or other financial products. We propose a "shorting attack," which makes a profit by massive short selling and sabotage to a Proof-of-Stake-based cryptocurrency. The shorting attack implies that the security of Proof-of-Stake-based cryptocurrency can be vulnerable by a low stake ratio.
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Collections - School of Cyber Security > Department of Information Security > 1. Journal Articles
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