Cryptographic wallets are an essential tool to securely store and maintain users’ secret keys and consequently their funds in Blockchain networks. A compelling approach to construct such wallets is to share the user’s secret key among several devices, such that an adversary must corrupt multiple machines to extract the entire secret key. Indeed, many leading cryptocurrency companies such as Coinbase, Binance, or ZenGo have started offering such distributed wallets to their customers. An important feature of a cryptographic wallet is its compatibility with the so-called BIP32 specification, the most widely adopted standard for cryptographic wallets. Essentially, BIP32 specifies the notion of a hierarchical deterministic wallet, which allows to create a key hierarchy in a deterministic fashion. Unfortunately, despite significant interest, no practically efficiently solution for a fully distributed wallet scheme, that also follows the BIP32 standard, exists. In this work, we show the first concretely efficient construction of a fully distributed wallet that is compliant with the BIP32 standard. To this end, we first provide a game-based notion of threshold signatures with rerandomizable keys and show an instantiation via the Gennaro and Goldfeder threshold ECDSA scheme (CCS’18). We then observe that one of BIP32’s key derivation mechanisms, the so-called hardened derivation, cannot efficiently be translated to the threshold setting. Instead, we devise a novel and efficient hardened derivation mechanism for the threshold setting that satisfies the same properties as the original mechanism as specified by BIP32. As a final contribution, we evaluate our solution with respect to its running time and communication cost.

Front-running attacks, which benefit from advanced knowledge of pending transactions, have proliferated in the blockchain space since the emergence of decentralized finance. Front-running causes devastating losses to honest participants and continues to endanger the fairness of the ecosystem. We present Flash Freezing Flash Boys (F3B), a blockchain architecture that addresses front-running attacks by using threshold cryptography. In F3B, a user generates a symmetric key to encrypt their transaction, and once the underlying consensus layer has finalized the transaction, a decentralized secret-management committee reveals this key. F3B mitigates front-running attacks because, before the consensus group finalizes it, an adversary can no longer read the content of a transaction, thus preventing the adversary from benefiting from advanced knowledge of pending transactions. Unlike other mitigation systems, F3B properly ensures that all unfinalized transactions, even with significant delays, remain private by adopting per-transaction protection. Furthermore, F3B addresses front-running at the execution layer; thus, our solution is agnostic to the underlying consensus algorithm and compatible with existing smart contracts. We evaluated F3B on Ethereum with a modified execution layer and found only a negligible (0.026%) increase in transaction latency, specifically due to running threshold decryption with a 128-member secret-management committee after a transaction is finalized; this indicates that F3B is both practical and low-cost.