A Study of Ethereum’s Transition from Proof-of-Work to Proof-of-Stake in Preventing Smart Contracts Criminal Activities

Abstract

With the ever-increasing advancement in blockchain technology, security is a significant concern when substantial investments are involved. This paper explores known smart contract exploits used in previous and current years. The purpose of this research is to provide a point of reference for users interacting with blockchain technology or smart contract developers. The primary research gathered in this paper analyses unique smart contracts deployed on a blockchain by investigating the Solidity code involved and the transactions on the ledger linked to these contracts. A disparity was found in the techniques used in 2021 compared to 2023 after Ethereum moved from a Proof-of-Work blockchain to a Proof-of-Stake one, demonstrating that with the advancement in blockchain technology, there is also a corresponding advancement in the level of effort bad actors exert to steal funds from users. The research concludes that as users become more wary of malicious smart contracts, bad actors continue to develop more sophisticated techniques to defraud users. It is recommended that even though this paper outlines many of the currently used techniques by bad actors, users who continue to interact with smart contracts should consistently stay up to date with emerging exploitations.