Proof-of-Burn

Abstract

Proof-of-burn has been used as a mechanism to destroy cryptocurrency in a verifiable manner. Despite its well known use, the mechanism has not been previously formally studied as a primitive. In this paper, we put forth the first cryptographic definition of what a proofof-burn protocol is. It consists of two functions: First, a function which generates a cryptocurrency address. When a user sends money to this address, the money is irrevocably destroyed. Second, a verification function which checks that an address is really unspendable. We propose the following properties for burn protocols. Unspendability, which mandates that an address which verifies correctly as a burn address cannot be used for spending; binding, which allows associating metadata with a particular burn; and uncensorability, which mandates that a burn address is indistinguishable from a regular cryptocurrency address. Our definition captures all previously known proof-of-burn protocols. Next, we design a novel construction for burning which is simple and flexible, making it compatible with all existing popular cryptocurrencies. We prove our scheme is secure in the Random Oracle model. We explore the application of destroying value in a legacy cryptocurrency to bootstrap a new one. The user burns coins in the source blockchain and subsequently creates a proof-of-burn, a short string proving that the burn took place, which she then submits to the destination blockchain to be rewarded with a corresponding amount. The user can use a standard wallet to conduct the burn without requiring specialized software, making our scheme user friendly. We propose burn verification mechanisms with different security guarantees, noting that the target blockchain miners do not necessarily need to monitor the source blockchain. Finally, we implement the verification of Bitcoin burns as an Ethereum smart contract and experimentally measure that the gas costs needed for verification are as low as standard Bitcoin transaction fees, illustrating that our scheme is practical.

The Burn-to-Claim cross-blockchain asset transfer protocol

“…The integration process for exchanging information may be based on other existing techniques. But to build trust about the shared information we must resolve specific properties of the individual transactions involved in the exchange process; that is, security: a cryptographic assurance of transfer commitment of transactions; correctness: each successful transaction commits only one valid outcome and fairness: either the transfer executes the transfer of an asset or return the asset [2,10].…”

“…In our protocol, the sender who wants to transfer the asset must present a proof that the asset is locked. To achieve this, we adopt the proof-of-burn protocol [10,14], which presents a mechanism where the sender transfers the asset to a nonspendable burn-address and is able to present that transaction as a proof for the locked asset.…”

“…Typically, these addresses are randomly generated, where the addresses do not have a corresponding private key therefore the asset at those addresses are not spendable. The burn protocol [10] presents proofs such that if the underlying cryptographic scheme is secure then the probability of finding a private key for a given burn address is nearly negligible.…”

A survey of Blockchain consensus algorithms: mechanism, design and applications

“…The PoS and DPoS algorithms are almost identical to PoW in their block addition and transaction confirmation phase. There are many other leader-based mode consensus algorithms such as proof of luck [37] and proof of burn [38]. Proof of luck uses the trusted execution environment (TEE) platform [39] to generate a trusted random number for choosing a leader, while in proof of burn, miners destroy (burn) coins by sending them to an address that does not spend.…”

Permissionless proof‐of‐reputation‐X: A hybrid reputation‐based consensus algorithm for permissionless blockchains

“…In addition, PoI favors rich nodes since the calculation of the importance score depends on the number of acquired coins. The proof of burn (PoB) 42 deals with the problem of retrievable coins in PoS. In PoB, miners have to send their coins to an eater address to burn them, and once sent, they will be removed from the network and not any more accessible.…”