September 23, 2021

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Rectifying Administrated ERC20 Tokens. (arXiv:2107.10979v1 [cs.CR])

The developers of Ethereum smart contracts often implement administrating
patterns, such as censoring certain users, creating or destroying balances on
demand, destroying smart contracts, or injecting arbitrary code. These routines
turn an ERC20 token into an administrated token – the type of Ethereum smart
contract that we scrutinize in this research. We discover that many smart
contracts are administrated, and the owners of these tokens carry lesser social
and legal responsibilities compared to the traditional centralized actors that
those tokens intend to disrupt. This entails two major problems: a) the owners
of the tokens have the ability to quickly steal all the funds and disappear
from the market; and b) if the private key of the owner’s account is stolen,
all the assets might immediately turn into the property of the attacker. We
develop a pattern recognition framework based on 9 syntactic features
characterizing administrated ERC20 tokens, which we use to analyze existing
smart contracts deployed on Ethereum Mainnet. Our analysis of 84,062 unique
Ethereum smart contracts reveals that nearly 58% of them are administrated
ERC20 tokens, which accounts for almost 90% of all ERC20 tokens deployed on
Ethereum. To protect users from the frivolousness of unregulated token owners
without depriving the ability of these owners to properly manage their tokens,
we introduce SafelyAdministrated – a library that enforces a responsible
ownership and management of ERC20 tokens. The library introduces three
mechanisms: deferred maintenance, board of trustees and safe pause. We
implement and test SafelyAdministrated in the form of Solidity abstract
contract, which is ready to be used by the next generation of safely
administrated ERC20 tokens.