Tornado.cash Decentralization applications Issues

Kfir Nissan

Tornado.cash by Peppersec - Private Ethereum Transactions

Tornado.cash is a recently announced dApp on Ethereum that allows private transactions on the otherwise public Ethereum network. Private transactions have been a much sought after feature on Ethereum, with many projects developing such features. Private transactions are a transfer of funds that provide a measure of privacy in the otherwise quite-public Ethereum network. In the case of Tornado.cash, the measure of privacy is in disconnecting between the entity sending the funds, and the one receiving the funds.

The Solution

To do this, Tornado.cash uses a mixer contract, in which the funds mix together. Using Zero-knowledge-proofs, Tornado.cash provides mechanisms for deposits to and withdrawal from this mixer contract while hiding the relationship between the sender and the receiver. Each withdrawal could be from any previous deposit. The Tornado.cash contract is designed to be decentralized and non-custodial, leaving users in full control of their funds throughout the process. Under the Tornado.cash implementation, the operator of the mixer receives a predetermined fee for each transaction.

The Tornado.cash project is an elegant solution to enabling somewhat private transactions over Ethereum, and uses existing technologies and is already available for use today on the mainnet. The Tornado.cash team have highlighted the project is still in beta phase, and use is still risky. This project is a great example of community projects and their benefit to the entire ecosystem, pushing the technology to its extremes.

The Problem

Reviewing the Tornado.cash contracts, we can see once again proof that truly decentralized applications are a difficult thing to create. While we have no doubt the team had the greatest of intentions, constructing systems that are secure against their own creators is a challenging task.

Reviewing the contracts in-depth, our analysis shows the current contract implementation allows the contract's operator to halt all withdrawals from the mixer. The full technical details are available below. The direct meaning of this issue is that the Tornado.cash team or any future operator of the mixer can freeze all funds currently in the mixer. We're confident the team has no intention to use this bug to their advantage, and the team has been very vocal that the contracts are still being reviewed.

Nevertheless, we see this as proof once again, that writing contracts that are safe and decentralized is a challenging task, and can be impacted by even the slightest issue.

Full Issue Technical Details

Tornado.cash contract's withdraw function transfers a constant allowed value minus a fee to the receiver and then transfers the fee to the contract's operator. The contract's operator is an address determined in the constructor, and that can be changed only by the current operator. If the contract's operator itself happened to be a contract where Ether can not be received, e.g. there is no payable function in the contract or the existing payable function reverts, or the payable function is gas heavy, then the whole transaction would be reverted, including the receiver's withdrawal. In other words, funds that have been deposited are locked until the flawed operator contract is replaced, and it puts the operator in a spot of a centralized single point of failure component.

Tornado Cash Mixer source

Proposed Fix

Put the operator's fee transfer logic in a different function, that can only be invoked in a different transaction, and this way eliminate the receiver dependence on the operator's contract.

About Valid Network

Valid Network’s blockchain security platform provides complete life cycle security for enterprise blockchains from initial development to active deployment and management. Based in Be'er Sheva, Israel, the company’s solutions enable enterprises to innovate with blockchain faster, providing complete visibility and control over their distributed applications and smart contract governance, compliance, and security posture through advanced platform capabilities.  

Secure the block with Valid Network.  

Learn more: https://valid.network  

Follow us: LinkedIn | Twitter | Blog

It’s time to Deriskify Crypto!

Uncover risks & opportunities in crypto to maximize your gains.

Valid Data’s real-time and predictive insights are used by Cryptocurrency traders and exchanges, as well as investors and hedge funds, to make better investment and trading decisions, to protect the value of their digital assets, and to capitalize on market opportunities that only Valid Network’s technology can uncover.

Try Valid Data

Other Blogs

Introducing Ethereplay by Valid Network

We are excited to announce Ethereplay by Valid Network, a free community tool to support examining, analyzing, optimizing and securing of smart contract code on Ethereum.

Onboarding blockchain tech? Don’t miss these important facts

Key issues that enterprises must carefully consider and deal with when onboarding blockchain technology

What are CBDC and are Digital Currencies Safe?

Cryptocurrency and DeFi trading platforms have long signified a coming change in the way currency is handled around the world.

Integer Overflow in Ethereum

Many involved in blockchain do not have a full comprehension of the impact of software flaws and how they can enable vulnerability.

Subscribe to our newsletter and get the latest updates every day

Get crypto analysis, insights and updates right to your inbox! Sign up here so you don't miss a single newsletter.

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.