How This Ethereum Monster Feeds On ETH Under The Radar

The Ethereum blockchain has its own version of a creature operating under its waters in search of victims. Product Lead and Steward at Flashbots, the organization working to create a solution for the MEV issue, Robert Miller discovered what is potentially one of the biggest mysteries on this network.

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Per a post on his blog, Miller described the process that allowed him to lure in the monster after receiving a tip on its existence. The creature in question is a bot that explores the Ethereum blockchain looking for transactions with a security vulnerability that has the potential to expose the user’s private keys.

The exploit comes from harvesting an “obscure mistake” in the process of creating a transaction on Ethereum, as Miller explained. This blockchain uses the Elliptic Curve Digital Signature Algorithm (ECDSA) to produce digital signatures and send transactions on the network.

The ECDSA is a key component on a blockchain that lets a user prove that he owns certain funds or assets. In that way, a digital signature produced with this algorithm proves that you own the private keys tied to the public keys used to send the assets and that the formers were used to sign a transaction. Miller said:

ECDSA works because of the fact that you can easily use a private key to generate a public key, but you can’t use a public key to derive a private key. You can, however, use a signature to back out a private key under some limited conditions.

In order to produce a signature, the ECDSA algorithm uses the private keys, the public keys, a random number (called nonce), and two fixed numbers. Thus, it generates a digital signature with two components which Miller referred to as r and s. This is how the Ethereum monster looks for victims.