Formal Analysis of Composable DeFi Protocols
This addresses security and reliability issues for DeFi developers and users, though it is an incremental improvement in formal verification methods.
The paper tackles the problem of vulnerabilities in decentralized finance (DeFi) protocols due to unforeseen composition effects by proposing a formal process-algebraic technique for modeling and verifying properties, demonstrated through a case study of Curve and Compound protocols.
Decentralized finance (DeFi) has become one of the most successful applications of blockchain and smart contracts. The DeFi ecosystem enables a wide range of crypto-financial activities, while the underlying smart contracts often contain bugs, with many vulnerabilities arising from the unforeseen consequences of composing DeFi protocols together. In this paper, we propose a formal process-algebraic technique that models DeFi protocols in a compositional manner to allow for efficient property verification. We also conduct a case study to demonstrate the proposed approach in analyzing the composition of two interacting DeFi protocols, namely, Curve and Compound. Finally, we discuss how the proposed modeling and verification approach can be used to analyze financial and security properties of interest.