The Monero network was recently the subject of much confusion as fears about an exploit attempted by hackers to destabilize the network were reported. Unfortunately, orphan blocks have begun to appear under these circumstances. CFB, an anonymous individual named in connection to the Qubic project has made wild cavalier claims against them. This article explores what transpired on the Monero network. It demystifies the jargon and debunks some of the hype, putting it in context and assessing the real threats at play.
Orphan blocks are an unfortunate reality of proof-of-work (PoW) blockchains such as Monero. They happen when two or more miners independently and almost simultaneously compute valid blocks at the same block height. In these situations, the network has to choose which block to move forward with, thus “orphaning” the other block(s). It is typical to have infrequent orphan blocks. A sudden wave of them can reveal grave underlying concerns, such as network latency issues or worse, an ongoing attack by some entity with dominion over a majority of the network’s hashpower. Most recently, an “unknown” miner won as high as 4 out of 5 times on Monero. Yet, this anomaly has led to some raised eyebrows within the community.
The situation was made worse when CFB indirectly assumed blame of the rise in orphan blocks. CFB pitched the operation as a proof of concept for Qubic’s distinct Proof of Work (uPoW) system. They made it clear that it was not a bad faith attack on Monero. They suggested that by dominating Monero's hashrate, they could showcase the benefits of Qubic's technology. CFB publicly urged cryptocurrency exchanges to increase the level of transaction confirmations required for Monero deposits. They issued this recommendation after observing an uptick in risk during a three-week period. This action, even though framed as a purely precautionary measure, added more wood to the fire to the speculation around what Qubic was really up to.
Understanding Orphan Blocks and Selfish Mining
To appreciate this new reality, first you need to understand orphan blocks and selfish mining.
Orphan Blocks Explained
Orphan blocks, as we previously discussed, happen all the time on PoW blockchains. They arise from the decentralized nature of mining, where multiple parties compete to solve complex cryptographic puzzles and add new blocks to the chain.
- They happen when two or more miners mine and broadcast the same valid block height.
- Orphan blocks are normal occurrences for proof-of-work blockchains.
- A high rate of orphaned blocks can indicate a problem in network-wide connection latency or even malicious behavior by one or more entities with a large hashpower share.
- The recent cases in Monero involved an "unknown" miner winning four out of five occurrences, which is atypical.
Selfish Mining Tactics
Selfish mining is a strategy where a miner or pool withholds newly mined blocks from the network, rather than broadcasting them immediately, in an attempt to gain a disproportionate share of the network's rewards.
Selfish mining can weaken the network's security, making it more susceptible to threats like double-spending or 51% attacks, by dropping the hash rate.
A mining pool with just 40% of the network's hashing power might receive more than 40% of the rewards by successfully employing selfish mining techniques.
Selfish mining was first described in 2013 by two Cornell University researchers, Emin Gün Sirer and Ittay Eyal.
There is ongoing debate in the crypto community about the effectiveness and risks of selfish mining, with some arguing that it can't consistently outperform honest mining.
The overall effectiveness of selfish mining, and more importantly, the ethics of the practice, are still hot topics of discussion in the cryptocurrency community.
CFB, who is part of the Qubic project, had previously taken indirect credit for the increased orphan block rate on the Monero Network. He framed this action, which was interpreted largely as a challenge to Monero, as a proof-of-concept for Qubic’s uPoW viability.
Qubic's Role and CFB's Claims
CFB’s comments imply that he doesn’t want to do direct damage, instead wants to impact the Monero network economically. Yet the risks of a concentrated hashrate continue to be worrisome.
Aspects of what produced the outcomes of Qubic and Monero bring fair questions of network security and stability to the fore.
- CFB advised exchanges to require 13 XMR transaction confirmations instead of 10 during the test period, suggesting the move is economically beneficial rather than malicious.
- CFB stated that the goal is not to harm, such as transaction reversals, but to make every miner on the Monero network join the QUBIC mining pool.
- CFB publicly flagged Aug. 2 to Aug. 31 as a window of elevated risk and urged exchanges to raise Monero deposit confirmations, framing the move as a precaution during their “test”.
- CFB described the operation as an economic campaign to dominate Monero's hashrate, which he believes will not cause harm but rather showcase the benefits of Qubic's uPoW system.
CFB maintains the activity is not about malice. The combination of increased hashpower centralization and the orphan rate’s rise creates some new possible exploit avenues.
Assessing the Risk to Monero and Actionable Insights
The Monero community should continue to be on guard and take all appropriate actions to defend the network’s integrity. The state of the current crypto landscape reinforces the need for decentralization, network resilience, and educated engagement with the cryptocurrency ecosystem.
- Qubic's hashrate dominance: Qubic gained 45% of Monero's network hashrate, bringing it close to the 51% threshold that could give it major control over the network.
- Orphan blocks: The Qubic mining war led to an increase in orphan blocks, which can indicate a problem in network-wide connection latency or malicious behavior by an entity with significant hashpower.
- Network resilience: Despite the attacks, the decentralized Monero network showed resilience, with nodes and services being fortified to withstand the pressure.
- Hashrate drop: The hashrate dropped to as low as 25% as nodes disconnected, indicating a potential vulnerability in the network.
- DDoS attacks: Qubic's infrastructure faced a mild DDoS attack, impacting some nodes and reducing tick quality, but the network persisted.
While CFB claims the activity is not malicious, the concentration of hashpower and the increased orphan rate could potentially lead to vulnerabilities.
For concerned Monero users, here are some actionable insights:
- Stay informed: Keep abreast of developments and discussions within the Monero community.
- Exercise caution: Follow CFB's advice and consider increasing the number of confirmations required for Monero transactions, especially when interacting with exchanges.
- Support decentralization: Contribute to the Monero network by running a node or participating in mining pools that promote a more distributed hashrate.
The Monero community must remain vigilant and proactive in safeguarding the network's integrity. The situation highlights the importance of decentralization, network resilience, and informed participation in the cryptocurrency ecosystem.
