Researchers at ZenGo have properly disclosed a vulnerability discovered in the Diogenes protocol proof. The proof is designed to provide the raw entropy for a Verifiable Delay Function (VDF) for the Ethereum 2.0 random beacon chain.

• Ligero Inc., the team behind Diogenes, is redrafting the proof of the protocol to iterate away the vulnerability, according to a ZenGo blog post.
• Entropy is a mathematical “randomness” that bolsters security for cryptographic functions.
• Ethereum’s long-pending upgrade, Ethereum 2.0, calls for a random beacon chain to create entropy. This beacon chain has been called the “spine” of Eth 2.0 for its role in coordinating functions between Ethereum’s main blockchain and all of its smaller, derivative chains called “shard chains.”
• VDFs are necessary for building a truly secure random beacon chain, ZenGo researcher Omer Shlomovits told CoinDesk.
• Under an Eth 2.0 paradigm, the Diogenes protocol orchestrates so-called “ceremonies” to generate the entropy that creates the parameters for a random beacon’s VDF. Multiple parties are involved in the process (up to 1,024 participants).
• Each participant who partakes in the ceremony only attains a piece of the “secret” – the cryptographic key that would allow attackers to interfere with the VDF’s “randomness”– so every one of the 1,024 participants would have to collude to piece together the full thing; Diogenes makes the fair assumption that at least one of these actors will remain honest.
• The “DogByte” attack, as ZenGo calls it, would allow anyone who observes the protocol transcript, not just the ceremony participants, to learn the secret the ceremony creates. 
• With this secret, the attackers could theoretically “skew” or “bias the randomness generated in the beacon chain,” Shlomovits told CoinDesk. This could allow them to “gain an unfair advantage in all utilities that are built atop the random beacon chain,” such as gaming it for a higher chance to validate new Ethereum 2.0 blocks or cheating a smart contract that relies on entropy from the beacon chain.
• This vulnerability is the second ZenGo has found in Diogenes’ design, and it’s part of an ongoing security audit of the protocol commissioned by the Ethereum Foundation and the VDF Alliance.
• The first vulnerability involved “a potential attack vector that could have [given the attacker] backdoor access to [an] Ethereum 2.0 VDF” and required “the [VDF’s] central coordinator to collude with one of the participants,” ZenGo writes in their recent blog post.
• Shlomovits emphasized ZenGo is working closely with Ligero Inc. on this research, adding that the “quality of the bug attests to the high quality of the project and the amount of scrutiny that is put into testing this protocol,” and that Eth 2.0’s burgeoning tech stack appears to be “highly resilient.”
• A third blog on ZenGo’s findings is forthcoming.

Read more: Ethereum 2.0: Closer Than Ever, Still Plenty of Work to Do