A Blockchain-enabled Anonymous-yet- Traceable Distributed Key Generation

Abstract

Many threshold systems require some kind of secret sharing during their set-up phase. There has been several recent work in doing secret sharing in a distributed manner through the use of Blockchain so that one does not have to rely on trusted third parties nor strong assumptions about the communication medium. This paper continues this line of work and presents a new protocol for distributed key generation (DKG). We develop a new technique that leverages the mainchain of a popular blockchain platform like Bitcoin, together with a mixing service and a group signature scheme, to provide anonymity and traceability; we connect this to a sidechain, pegged to the mainchain, that brings a better scalability. We implemented the technique on the joint platform Bitcoin/RootStock and use CoinJoin/CoinShuffle as the mixing service. The evaluation section shows a decrease by 99 % in the execution cost of our protocol compared to the same implementation on a smart-contract-friendly blockchain such as Ethereum.