Presented at WTSC (April 2017): http://fc17.ifca.ai/wtsc/ Video: https://youtu.be/D4sa9U2HXMQ Paper: http://orbilu.uni.lu/handle/10993/30975

1. Findel: Ethereum
Derivatives
Biryukov,
Khovratovich,
Tikhomirov
Introduction
Financial Languages
Composable
Contracts
Ethereum
Our Contribution
Findel DSL
Examples
Gateways
Conclusion
1/18
Findel: Secure Derivative Contracts for
Ethereum
Alex Biryukov Dmitry Khovratovich
Sergei Tikhomirov
1st Workshop on Trusted Smart Contracts
In Association with Financial Cryptography 17
7 April 2017, Malta

2. Findel: Ethereum
Derivatives
Biryukov,
Khovratovich,
Tikhomirov
Introduction
Financial Languages
Composable
Contracts
Ethereum
Our Contribution
Findel DSL
Examples
Gateways
Conclusion
2/18
... and Smart Contract Developer
Adapted from xkcd.com/1428

3. Findel: Ethereum
Derivatives
Biryukov,
Khovratovich,
Tikhomirov
Introduction
Financial Languages
Composable
Contracts
Ethereum
Our Contribution
Findel DSL
Examples
Gateways
Conclusion
3/18
Contract Programming is Different
”Move fast and break things”: unacceptable!
Real money (property, resources) at stake
Side-effects often cause trouble (The DAO)
We need a formally verifiable contract language

4. Findel: Ethereum
Derivatives
Biryukov,
Khovratovich,
Tikhomirov
Introduction
Financial Languages
Composable
Contracts
Ethereum
Our Contribution
Findel DSL
Examples
Gateways
Conclusion
4/18
A Secure Financial DSL Helps
Avoid misinterpretation
Standardize templates
Prove correctness
Facilitate automated processing

5. Findel: Ethereum
Derivatives
Biryukov,
Khovratovich,
Tikhomirov
Introduction
Financial Languages
Composable
Contracts
Ethereum
Our Contribution
Findel DSL
Examples
Gateways
Conclusion
5/18
Composable Contracts [Peyton Jones et al. 2003]
Ten primitives to compose complex agreements
Declarative paradigm
Implemented as an embedded DSL in Haskell

6. Findel: Ethereum
Derivatives
Biryukov,
Khovratovich,
Tikhomirov
Introduction
Financial Languages
Composable
Contracts
Ethereum
Our Contribution
Findel DSL
Examples
Gateways
Conclusion
5/18
Composable Contracts [Peyton Jones et al. 2003]
Ten primitives to compose complex agreements
Declarative paradigm
Implemented as an embedded DSL in Haskell
Example: zero-coupon bond
when (at 2018-01-01) (scale (konst 100)) (one $))

7. Findel: Ethereum
Derivatives
Biryukov,
Khovratovich,
Tikhomirov
Introduction
Financial Languages
Composable
Contracts
Ethereum
Our Contribution
Findel DSL
Examples
Gateways
Conclusion
6/18
Ethereum
Turing-complete virtual machine
Key feature: trustless execution
Perfect match for financial agreements!

8. Findel: Ethereum
Derivatives
Biryukov,
Khovratovich,
Tikhomirov
Introduction
Financial Languages
Composable
Contracts
Ethereum
Our Contribution
Findel DSL
Examples
Gateways
Conclusion
7/18
Ethereum Meets Composable Contracts
Map declarative DSL to blockchain execution paradigm
Retrieve and validate external data
Ensure that execution cost is bearable

9. Findel: Ethereum
Derivatives
Biryukov,
Khovratovich,
Tikhomirov
Introduction
Financial Languages
Composable
Contracts
Ethereum
Our Contribution
Findel DSL
Examples
Gateways
Conclusion
8/18
Financial Derivatives Language (Findel)
Contract: agreement between issuer and owner
Contract description defines rights and obligations
Description is a tree of primitives
Description and issuer are immutable
Ownership may be transferred
Smart contract acts as execution environment

10. Findel: Ethereum
Derivatives
Biryukov,
Khovratovich,
Tikhomirov
Introduction
Financial Languages
Composable
Contracts
Ethereum
Our Contribution
Findel DSL
Examples
Gateways
Conclusion
9/18
Findel Primitives 1/2
Zero – do nothing

11. Findel: Ethereum
Derivatives
Biryukov,
Khovratovich,
Tikhomirov
Introduction
Financial Languages
Composable
Contracts
Ethereum
Our Contribution
Findel DSL
Examples
Gateways
Conclusion
9/18
Findel Primitives 1/2
Zero – do nothing
One – transfer 1 unit of currency from issuer to owner

12. Findel: Ethereum
Derivatives
Biryukov,
Khovratovich,
Tikhomirov
Introduction
Financial Languages
Composable
Contracts
Ethereum
Our Contribution
Findel DSL
Examples
Gateways
Conclusion
9/18
Findel Primitives 1/2
Zero – do nothing
One – transfer 1 unit of currency from issuer to owner
Scale(k, c) – multiply all payments by a constant value

13. Findel: Ethereum
Derivatives
Biryukov,
Khovratovich,
Tikhomirov
Introduction
Financial Languages
Composable
Contracts
Ethereum
Our Contribution
Findel DSL
Examples
Gateways
Conclusion
9/18
Findel Primitives 1/2
Zero – do nothing
One – transfer 1 unit of currency from issuer to owner
Scale(k, c) – multiply all payments by a constant value
ScaleObs(obs, c) – multiply all payments by an
observable value (think exchange rate)

14. Findel: Ethereum
Derivatives
Biryukov,
Khovratovich,
Tikhomirov
Introduction
Financial Languages
Composable
Contracts
Ethereum
Our Contribution
Findel DSL
Examples
Gateways
Conclusion
9/18
Findel Primitives 1/2
Zero – do nothing
One – transfer 1 unit of currency from issuer to owner
Scale(k, c) – multiply all payments by a constant value
ScaleObs(obs, c) – multiply all payments by an
observable value (think exchange rate)
Give(c) – swap parties

15. Findel: Ethereum
Derivatives
Biryukov,
Khovratovich,
Tikhomirov
Introduction
Financial Languages
Composable
Contracts
Ethereum
Our Contribution
Findel DSL
Examples
Gateways
Conclusion
10/18
Findel Primitives 2/2
And(c1, c2) – execute both sub-contracts

16. Findel: Ethereum
Derivatives
Biryukov,
Khovratovich,
Tikhomirov
Introduction
Financial Languages
Composable
Contracts
Ethereum
Our Contribution
Findel DSL
Examples
Gateways
Conclusion
10/18
Findel Primitives 2/2
And(c1, c2) – execute both sub-contracts
Or(c1, c2) – owner chooses which sub-contract to
execute

17. Findel: Ethereum
Derivatives
Biryukov,
Khovratovich,
Tikhomirov
Introduction
Financial Languages
Composable
Contracts
Ethereum
Our Contribution
Findel DSL
Examples
Gateways
Conclusion
10/18
Findel Primitives 2/2
And(c1, c2) – execute both sub-contracts
Or(c1, c2) – owner chooses which sub-contract to
execute
If (obs, c1, c2) – execute one of sub-contracts
(depending on observable)

18. Findel: Ethereum
Derivatives
Biryukov,
Khovratovich,
Tikhomirov
Introduction
Financial Languages
Composable
Contracts
Ethereum
Our Contribution
Findel DSL
Examples
Gateways
Conclusion
10/18
Findel Primitives 2/2
And(c1, c2) – execute both sub-contracts
Or(c1, c2) – owner chooses which sub-contract to
execute
If (obs, c1, c2) – execute one of sub-contracts
(depending on observable)
Timebound(t0, t1, c) – execute c, if within time bounds

19. Findel: Ethereum
Derivatives
Biryukov,
Khovratovich,
Tikhomirov
Introduction
Financial Languages
Composable
Contracts
Ethereum
Our Contribution
Findel DSL
Examples
Gateways
Conclusion
11/18
Example 1/3: Currency Exchange
And(Give(One(EUR)), ScaleObs(exchAddr, One(USD)))

20. Findel: Ethereum
Derivatives
Biryukov,
Khovratovich,
Tikhomirov
Introduction
Financial Languages
Composable
Contracts
Ethereum
Our Contribution
Findel DSL
Examples
Gateways
Conclusion
12/18
Example 2/3: European Option
Timebound(t0 − δ, t0 + δ, Or(One(EUR), Zero))

21. Findel: Ethereum
Derivatives
Biryukov,
Khovratovich,
Tikhomirov
Introduction
Financial Languages
Composable
Contracts
Ethereum
Our Contribution
Findel DSL
Examples
Gateways
Conclusion
13/18
Example 3/3: Binary Option
If (orclAddr, Scale(10, One(USD)), Zero)

22. Findel: Ethereum
Derivatives
Biryukov,
Khovratovich,
Tikhomirov
Introduction
Financial Languages
Composable
Contracts
Ethereum
Our Contribution
Findel DSL
Examples
Gateways
Conclusion
14/18
External Data Problem
Contracts require external data
Ethereum is isolated from broader Internet

23. Findel: Ethereum
Derivatives
Biryukov,
Khovratovich,
Tikhomirov
Introduction
Financial Languages
Composable
Contracts
Ethereum
Our Contribution
Findel DSL
Examples
Gateways
Conclusion
14/18
External Data Problem
Contracts require external data
Ethereum is isolated from broader Internet
Our solution: gateways

24. Findel: Ethereum
Derivatives
Biryukov,
Khovratovich,
Tikhomirov
Introduction
Financial Languages
Composable
Contracts
Ethereum
Our Contribution
Findel DSL
Examples
Gateways
Conclusion
15/18
Gateways
Smart contract pulls and stores external data with
timestamp
Optional proof of authenticity (e.g., signature under
known public key)
Findel marketplace queries gateway when needed
Parties are responsible for updating gateways

25. Findel: Ethereum
Derivatives
Biryukov,
Khovratovich,
Tikhomirov
Introduction
Financial Languages
Composable
Contracts
Ethereum
Our Contribution
Findel DSL
Examples
Gateways
Conclusion
16/18
What Is Done
Defined a declarative DSL suited for blockchain
Implemented a marketplace smart contract in Solidity
Assessed cost of operation (∼ $0.1 per avg operation)1
1
As of Jan 2017 at $10 / ether

26. Findel: Ethereum
Derivatives
Biryukov,
Khovratovich,
Tikhomirov
Introduction
Financial Languages
Composable
Contracts
Ethereum
Our Contribution
Findel DSL
Examples
Gateways
Conclusion
17/18
Future Work
Enforcement: deal with users defaulting on debt
Model balances using ERC20 Token
Extend model to support multi-party contracts
Look into valuation and verification

27. Findel: Ethereum
Derivatives
Biryukov,
Khovratovich,
Tikhomirov
Introduction
Financial Languages
Composable
Contracts
Ethereum
Our Contribution
Findel DSL
Examples
Gateways
Conclusion
18/18
Questions?
cryptolux.org
@serg tikhomirov
sergei.tikhomirov@uni.lu