Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/301927 
Year of Publication: 
2024
Series/Report no.: 
Bank of Canada Staff Discussion Paper No. 2024-10
Publisher: 
Bank of Canada, Ottawa
Abstract: 
This paper presents OVer, a framework designed to automatically analyze the behaviour of decentralized finance (DeFi) protocols when subjected to a "skewed" oracle input. OVer firstly performs a symbolic analysis on the given contract and constructs a model of constraints. Then, the framework leverages a satisfiability modulo theory solver to identify parameters that allow its secure operation. Furthermore, guard statements can be generated for smart contracts that may use the oracle values, thus effectively preventing oracle manipulation attacks. Empirical results show that OVer can successfully analyze all 10 benchmarks collected, which encompass a diverse range of DeFi protocols. Additionally, this paper illustrates that current parameters used in the majority of benchmarks are inadequate to ensure safety when confronted with significant oracle deviations. It shows that existing ad-hoc control mechanisms such as introducing delays are often insufficient or even detrimental to protect the DeFi protocols against the oracle deviation in the real world. Moreover, this paper delves into the design considerations of price oracles within a potential blockchain-based digital currency
Subjects: 
Central bank research
digital currencies and fintech
payment clearing and settlement systems
JEL: 
G
G1
G15
E4
E42
E5
E51
O
O3
O31
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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