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ADR 001: Coin Source Tracing

Changelog

  • 2020-07-09: Initial Draft
  • 2020-08-11: Implementation changes

Status

Accepted, Implemented

Context

The specification for IBC cross-chain fungible token transfers (ICS20), needs to be aware of the origin of any token denomination in order to relay a Packet which contains the sender and recipient addressed in the FungibleTokenPacketData.

The Packet relay sending works based in 2 cases (per specification and Colin Axnér's description):

  1. Sender chain is acting as the source zone. The coins are transferred to an escrow address (i.e locked) on the sender chain and then transferred to the receiving chain through IBC TAO logic. It is expected that the receiving chain will mint vouchers to the receiving address.

  2. Sender chain is acting as the sink zone. The coins (vouchers) are burned on the sender chain and then transferred to the receiving chain though IBC TAO logic. It is expected that the receiving chain, which had previously sent the original denomination, will unescrow the fungible token and send it to the receiving address.

Another way of thinking of source and sink zones is through the token's timeline. Each send to any chain other than the one it was previously received from is a movement forwards in the token's timeline. This causes trace to be added to the token's history and the destination port and destination channel to be prefixed to the denomination. In these instances the sender chain is acting as the source zone. When the token is sent back to the chain it previously received from, the prefix is removed. This is a backwards movement in the token's timeline and the sender chain is acting as the sink zone.

Example

Assume the following channel connections exist and that all channels use the port ID transfer:

  • chain A has channels with chain B and chain C with the IDs channelToB and channelToC, respectively
  • chain B has channels with chain A and chain C with the IDs channelToA and channelToC, respectively
  • chain C has channels with chain A and chain B with the IDs channelToA and channelToB, respectively

These steps of transfer between chains occur in the following order: A -> B -> C -> A -> C. In particular:

  1. A -> B: sender chain is source zone. A sends packet with denom (escrowed on A), B receives denom and mints and sends voucher transfer/channelToA/denom to recipient.
  2. B -> C: sender chain is source zone. B sends packet with transfer/channelToA/denom (escrowed on B), C receives transfer/channelToA/denom and mints and sends voucher transfer/channelToB/transfer/channelToA/denom to recipient.
  3. C -> A: sender chain is source zone. C sends packet with transfer/channelToB/transfer/channelToA/denom (escrowed on C), A receives transfer/channelToB/transfer/channelToA/denom and mints and sends voucher transfer/channelToC/transfer/channelToB/transfer/channelToA/denom to recipient.
  4. A -> C: sender chain is sink zone. A sends packet with transfer/channelToC/transfer/channelToB/transfer/channelToA/denom (burned on A), C receives transfer/channelToC/transfer/channelToB/transfer/channelToA/denom, and unescrows and sends transfer/channelToB/transfer/channelToA/denom to recipient.

The token has a final denomination on chain C of transfer/channelToB/transfer/channelToA/denom, where transfer/channelToB/transfer/channelToA is the trace information.

In this context, upon a receive of a cross-chain fungible token transfer, if the sender chain is the source of the token, the protocol prefixes the denomination with the port and channel identifiers in the following format:

prefix + denom = {destPortN}/{destChannelN}/.../{destPort0}/{destChannel0}/denom

Example: transferring 100 uatom from port HubPort and channel HubChannel on the Hub to Ethermint's port EthermintPort and channel EthermintChannel results in 100 EthermintPort/EthermintChannel/uatom, where EthermintPort/EthermintChannel/uatom is the new denomination on the receiving chain.

In the case those tokens are transferred back to the Hub (i.e the source chain), the prefix is trimmed and the token denomination updated to the original one.

Problem

The problem of adding additional information to the coin denomination is twofold:

  1. The ever increasing length if tokens are transferred to zones other than the source:

If a token is transferred n times via IBC to a sink chain, the token denom will contain n pairs of prefixes, as shown on the format example above. This poses a problem because, while port and channel identifiers have a maximum length of 64 each, the SDK Coin type only accepts denoms up to 64 characters. Thus, a single cross-chain token, which again, is composed by the port and channels identifiers plus the base denomination, can exceed the length validation for the SDK Coins.

This can result in undesired behaviours such as tokens not being able to be transferred to multiple sink chains if the denomination exceeds the length or unexpected panics due to denomination validation failing on the receiving chain.

  1. The existence of special characters and uppercase letters on the denomination:

In the SDK every time a Coin is initialized through the constructor function NewCoin, a validation of a coin's denom is performed according to a Regex, where only lowercase alphanumeric characters are accepted. While this is desirable for native denominations to keep a clean UX, it presents a challenge for IBC as ports and channels might be randomly generated with special and uppercase characters as per the ICS 024 - Host Requirements specification.

Decision

The issues outlined above, are applicable only to SDK-based chains, and thus the proposed solution are do not require specification changes that would result in modification to other implementations of the ICS20 spec.

Instead of adding the identifiers on the coin denomination directly, the proposed solution hashes the denomination prefix in order to get a consistent length for all the cross-chain fungible tokens.

This will be used for internal storage only, and when transferred via IBC to a different chain, the denomination specified on the packed data will be the full prefix path of the identifiers needed to trace the token back to the originating chain, as specified on ICS20.

The new proposed format will be the following:

ibcDenom = "ibc/" + hash(trace path + "/" + base denom)

The hash function will be a SHA256 hash of the fields of the DenomTrace:

// DenomTrace contains the base denomination for ICS20 fungible tokens and the source tracing
// information
message DenomTrace {
  // chain of port/channel identifiers used for tracing the source of the fungible token
  string path = 1;
  // base denomination of the relayed fungible token
  string base_denom = 2;
}

The IBCDenom function constructs the Coin denomination used when creating the ICS20 fungible token packet data:

// Hash returns the hex bytes of the SHA256 hash of the DenomTrace fields using the following formula:
//
// hash = sha256(tracePath + "/" + baseDenom)
func (dt DenomTrace) Hash() tmbytes.HexBytes {
  return tmhash.Sum(dt.Path + "/" + dt.BaseDenom)
}

// IBCDenom a coin denomination for an ICS20 fungible token in the format 'ibc/{hash(tracePath + baseDenom)}'. 
// If the trace is empty, it will return the base denomination.
func (dt DenomTrace) IBCDenom() string {
  if dt.Path != "" {
    return fmt.Sprintf("ibc/%s", dt.Hash())
  }
  return dt.BaseDenom
}

x/ibc-transfer Changes

In order to retrieve the trace information from an IBC denomination, a lookup table needs to be added to the ibc-transfer module. These values need to also be persisted between upgrades, meaning that a new []DenomTrace GenesisState field state needs to be added to the module:

// GetDenomTrace retrieves the full identifiers trace and base denomination from the store.
func (k Keeper) GetDenomTrace(ctx Context, denomTraceHash []byte) (DenomTrace, bool) {
  store := ctx.KVStore(k.storeKey)
  bz := store.Get(types.KeyDenomTrace(traceHash))
  if bz == nil {
    return &DenomTrace, false
  }

  var denomTrace DenomTrace
  k.cdc.MustUnmarshalBinaryBare(bz, &denomTrace)
  return denomTrace, true
}

// HasDenomTrace checks if a the key with the given trace hash exists on the store.
func (k Keeper) HasDenomTrace(ctx Context, denomTraceHash []byte)  bool {
  store := ctx.KVStore(k.storeKey)
  return store.Has(types.KeyTrace(denomTraceHash))
}

// SetDenomTrace sets a new {trace hash -> trace} pair to the store.
func (k Keeper) SetDenomTrace(ctx Context, denomTrace DenomTrace) {
  store := ctx.KVStore(k.storeKey)
  bz := k.cdc.MustMarshalBinaryBare(&denomTrace)
  store.Set(types.KeyTrace(denomTrace.Hash()), bz)
}

The MsgTransfer will validate that the Coin denomination from the Token field contains a valid hash, if the trace info is provided, or that the base denominations matches:

func (msg MsgTransfer) ValidateBasic() error {
  // ...
  return ValidateIBCDenom(msg.Token.Denom)
}
// ValidateIBCDenom validates that the given denomination is either:
//
//  - A valid base denomination (eg: 'uatom')
//  - A valid fungible token representation (i.e 'ibc/{hash}') per ADR 001 https://github.com/cosmos/cosmos-sdk/blob/master/docs/architecture/adr-001-coin-source-tracing.md
func ValidateIBCDenom(denom string) error {
  denomSplit := strings.SplitN(denom, "/", 2)

  switch {
  case strings.TrimSpace(denom) == "",
    len(denomSplit) == 1 && denomSplit[0] == "ibc",
    len(denomSplit) == 2 && (denomSplit[0] != "ibc" || strings.TrimSpace(denomSplit[1]) == ""):
    return sdkerrors.Wrapf(ErrInvalidDenomForTransfer, "denomination should be prefixed with the format 'ibc/{hash(trace + \"/\" + %s)}'", denom)

  case denomSplit[0] == denom && strings.TrimSpace(denom) != "":
    return sdk.ValidateDenom(denom)
  }

  if _, err := ParseHexHash(denomSplit[1]); err != nil {
    return Wrapf(err, "invalid denom trace hash %s", denomSplit[1])
  }

  return nil
}

The denomination trace info only needs to be updated when token is received:

  • Receiver is source chain: The receiver created the token and must have the trace lookup already stored (if necessary ie native token case wouldn't need a lookup).
  • Receiver is not source chain: Store the received info. For example, during step 1, when chain B receives transfer/channelToA/denom.
// SendTransfer
// ...

  fullDenomPath := token.Denom

// deconstruct the token denomination into the denomination trace info
// to determine if the sender is the source chain
if strings.HasPrefix(token.Denom, "ibc/") {
  fullDenomPath, err = k.DenomPathFromHash(ctx, token.Denom)
  if err != nil {
    return err
  }
}

if types.SenderChainIsSource(sourcePort, sourceChannel, fullDenomPath) {
//...
// DenomPathFromHash returns the full denomination path prefix from an ibc denom with a hash
// component.
func (k Keeper) DenomPathFromHash(ctx sdk.Context, denom string) (string, error) {
  hexHash := denom[4:]
  hash, err := ParseHexHash(hexHash)
  if err != nil {
    return "", Wrap(ErrInvalidDenomForTransfer, err.Error())
  }

  denomTrace, found := k.GetDenomTrace(ctx, hash)
  if !found {
    return "", Wrap(ErrTraceNotFound, hexHash)
  }

  fullDenomPath := denomTrace.GetFullDenomPath()
  return fullDenomPath, nil
}
// OnRecvPacket
// ...

// This is the prefix that would have been prefixed to the denomination
// on sender chain IF and only if the token originally came from the
// receiving chain.
//
// NOTE: We use SourcePort and SourceChannel here, because the counterparty
// chain would have prefixed with DestPort and DestChannel when originally
// receiving this coin as seen in the "sender chain is the source" condition.
if ReceiverChainIsSource(packet.GetSourcePort(), packet.GetSourceChannel(), data.Denom) {
  // sender chain is not the source, unescrow tokens

  // remove prefix added by sender chain
  voucherPrefix := types.GetDenomPrefix(packet.GetSourcePort(), packet.GetSourceChannel())
  unprefixedDenom := data.Denom[len(voucherPrefix):]
  token := sdk.NewCoin(unprefixedDenom, sdk.NewIntFromUint64(data.Amount))

  // unescrow tokens
  escrowAddress := types.GetEscrowAddress(packet.GetDestPort(), packet.GetDestChannel())
  return k.bankKeeper.SendCoins(ctx, escrowAddress, receiver, sdk.NewCoins(token))
}

// sender chain is the source, mint vouchers

// since SendPacket did not prefix the denomination, we must prefix denomination here
sourcePrefix := types.GetDenomPrefix(packet.GetDestPort(), packet.GetDestChannel())
// NOTE: sourcePrefix contains the trailing "/"
prefixedDenom := sourcePrefix + data.Denom

// construct the denomination trace from the full raw denomination
denomTrace := types.ParseDenomTrace(prefixedDenom)

// set the value to the lookup table if not stored already
traceHash := denomTrace.Hash()
if !k.HasDenomTrace(ctx, traceHash) {
  k.SetDenomTrace(ctx, traceHash, denomTrace)
}

voucherDenom := denomTrace.IBCDenom()
voucher := sdk.NewCoin(voucherDenom, sdk.NewIntFromUint64(data.Amount))

// mint new tokens if the source of the transfer is the same chain
if err := k.bankKeeper.MintCoins(
  ctx, types.ModuleName, sdk.NewCoins(voucher),
); err != nil {
  return err
}

// send to receiver
return k.bankKeeper.SendCoinsFromModuleToAccount(
  ctx, types.ModuleName, receiver, sdk.NewCoins(voucher),
)
func NewDenomTraceFromRawDenom(denom string) DenomTrace{
  denomSplit := strings.Split(denom, "/")
  trace := ""
  if len(denomSplit) > 1 {
    trace = strings.Join(denomSplit[:len(denomSplit)-1], "/")
  }
  return DenomTrace{
    BaseDenom: denomSplit[len(denomSplit)-1],
    Trace:     trace,
  }
}

One final remark is that the FungibleTokenPacketData will remain the same, i.e with the prefixed full denomination, since the receiving chain may not be an SDK-based chain.

Coin Changes

The coin denomination validation will need to be updated to reflect these changes. In particular, the denomination validation function will now:

  • Accept slash separators ("/") and uppercase characters (due to the HexBytes format)
  • Bump the maximum character length to 128, as the hex representation used by Tendermint's HexBytes type contains 64 characters.

Additional validation logic, such as verifying the length of the hash, the may be added to the bank module in the future if the custom base denomination validation is integrated into the SDK.

Positive

  • Clearer separation of the source tracing behaviour of the token (transfer prefix) from the original Coin denomination
  • Consistent validation of Coin fields (i.e no special characters, fixed max length)
  • Cleaner Coin and standard denominations for IBC
  • No additional fields to SDK Coin

Negative

  • Store each set of tracing denomination identifiers on the ibc-transfer module store
  • Clients will have to fetch the base denomination every time they receive a new relayed fungible token over IBC. This can be mitigated using a map/cache for already seen hashes on the client side. Other forms of mitigation, would be opening a websocket connection subscribe to incoming events.

Neutral

  • Slight difference with the ICS20 spec
  • Additional validation logic for IBC coins on the ibc-transfer module
  • Additional genesis fields
  • Slightly increases the gas usage on cross-chain transfers due to access to the store. This should be inter-block cached if transfers are frequent.

References