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Plasma Cash

Speakers: Georgios Konstantopoulos

Date: January 20, 2019

Transcript By: Bryan Bishop

Category: Conference

Plasma Cash: Towards more efficient Plasma constructions


Shi: Okay, we’re going to start the next session. Please return to your seats. I have an important announcement before the session starts. Because of the fire code, we can’t allow people standing room. Please go to the overflow rooms at the end of the hallway. We don’t want the fire marshall to come and shutdown the conference. Also, the acoustics of the room make it so that we can hear the details of your conversations in the back. Our first talk in this session is about Plasma Cash.


Hi everyone, thank you for coming. I’m going to talk about plasma and plasma cash which was introduced in 2017 by Vitalik Buterin and Joseph Poon. Since then, the technique has evolved a lot. I’m here to talk about what it can do and can’t do. In ethereum, it’s been a big buzzword so let’s talk about limits.

Table of contents

I’ll describe how transactions work, how you can get transactions into and out of plasma, what are the security assumptions they have, and what we can do in the future to make it even better.

Related work

Related work includes sidechains with two-way pegs like merged mining svp proof or NiPoPoWs, or federated pegs using multisig. Also, there’s drivechains which have different properties, and then shadowchains and treechains and client-side validation and NOCUST. I don’t understand treechains. NOCUST is similar to plasma.


Plasma is a framework for creating non-custodial sidechains. In the normal model, in a sidechain you get your funds in, you do transactions, then you do a special transaction to do a peg-out transaction. There’s some spending conditions and an escrow contract. But if the sidechain doesn’t allow you to exit and unlock the funds on the parent chain, or if the multisig participants are censoring you, then you can’t really get your funds and they are stuck. So what do you do?

In plasma, we take each transaction root from each block and commit it to the original chain. If we want to do scalability, rather than having a decentralized chain, we have some untrusted database manager which in plasma lingo is the “operator” and it’s responsible for maintaining the state of the chain and it makes block commitments. The operator doesn’t need to be trusted. You cannot assume the state transitions will be valid.

So you need to introduce a way that in the case where the state validator makes an invalid state transition then users need to be able to make a dispute.

Exit game: Delayed withdrawals

At some point, you say you want to start an exit. You go to an escrow contract, you say please unlock my funds, you have a timelock, and then after that point the transaction is finalized and you got your funds out. But if in the case that there’s a dispute, some other party will do a challenge transaction which will cancel the exit.

Non-fungible Plasma, aka Plasma Cash

UTXO ID is the leaf index in a sparse merkle tree. The deposit means you receive a coin with a seiral number, just like anonymous cash. For each 1 input you get 1 UTXO. To make a transaction, you reference a parent transaction. To exit, you reveal the transaction and the parent transaction.

What’s a sparse merkle tree?

Let me show you a nice graph. It’s an ordered merkle tree where each index of an element is its ID. This allows you to do an inclusion proof. Since it’s a sorted ordered merkle tree, you can also do exclusion proofs, where you attest to the inclusion of zero.

Transfers, exits and challenges

Say I have some funds on the main chain. I deposit them into a smart contract, which then emits an event, which then grants me the funds on the Plasma chain. If the Plasma chain doesn’t grant you any funds, then you can withdraw them and simply get them back directly.

Okay, the user now has a coin and she wants to transfer it to another user. Alice transfers to Bob. Bob verifies the coin by checking its history. The transaction history grows with the number of hops, and it all needs to be verified.

The receiver must verify the UTXO history since the coin’s deposit, even when the block didn’t have a related transaction. You need to send merkle exclusion proofs or merkle nonmembership proofs. So you would have to get this from the last user, or from the operator, or from some data availability provider such as the operator.

You exit by referencing the transaction and where you got it from.


We can model each coin as a state machine. When you deposit, it’s in the deposited state. E is for exit. When you start an exit, the coin goes to the exiting stage. Then you can wait 7 days, finalize the exit, and then you can go to the next state, and then you can withdraw your coin. By the time you withdraw the coin, it’s out of the system.

Non-interactive challenge

In the other case, say it’s an exit and it’s a bad exit state, and someone does a non-interactive challenge and I’m back to square one. This enforces that you can’t have an invalid state for the coin.

Interactive challenge

There are also interactive challenges. I can respond within some time period to the interactive challenge. An exit is only valid if it has zero outstanding pending challenges. You could respond to a challenge and then proceed as normal.


What if the operator wants to steal coins? The operator can include an invalid state transition. This would be a case of an exiting a coin with invalid history. Say the operator gives the coin to Bob or something. If Bob and Charlie were honest parties, they would check the coin history and reject the coin because the history was invalid. But what if they are colluding to steal the coin?

You can make an interactive challenge of an invalid history where you claim you’re not the latest owner of the coin, no I’m the latest owner. So you will provide the merkle proof, and someone can reply with another merkle proof showing something else. There’s no extension of the challenge period, so this is at most one or two steps of interaction depending on the attack. This is an attack that requires the database operator to try to steal funds from their users, which as a business you would expect the users would then get out of the chain or whatever.

Security and incentive compatibility

Let’s talk about the security of this exit game. So far, we haven’t talked about miners. When you do the exit, you need to go to the parent chain and your transaction needs to be included in some bound time. Considering the network is live, a challenge can be broadcast almost at the same time as when you try a malicious exit. But maybe nobody is watching or nobody cares, so you need some delay. We need to model that when a challenge is broadcasted later, and then some threshold for when the challenge must be included. The later that you challenge, the easier it is to pull off this attack.

We have a safety condition where we pick the parameter T based on how powerful adversarial hash power would be. The safety condition is that D <= T + t0 - t1.

The attacker decision flow would be make a malicious exit, pay the transaction fees plus bond, and then in the case of success you get back the bond and you get the coin and you pay some transaction fees. Or the attack fails. But the attacker can go further and they can even attempt to frontrun the challenge. So the attacker tries to make a malicious exit, they frontrun a challenge by challenging themselves. This can be used to cut your losses from losing the bond. Instead of cutting your whole bond, you would only cut part of the bond. So perhaps there would be a percent of bond going to charity.

Incentive compatibility of the exit game

It depends on the on-chain conditions like withholding blocks, selfish mining, etc. It also depends on liveness of participants and a challenge period. The cost of an attack is simply the transaction fees and the fidelity bond which goes to the challenger, multiplied by the probability of a challenge because that’s how much you will lose on average.

Even if an attacker front runs, they can stop losing the bond, because if they frontrun the transaction they just pay some transaction fees. So we add a parameter alpha which is less than 1 and you burn part of the bond. If the probability is too low, then the attacker wont frontrun.

Future and ongoing work

This is where we are currently. Plasma Cash is being implemented and used. There’s some pain points we need to address. This scheme is secure and succinct and doesn’t require many requirements on the client side. Each coin is unique. Non-fungible coins are a double-edged sword. You could do some sort of change provider where just like cash you just pay 5 and you get back 2. The limitation here is that there needs to be a primitive like an atomic swap where you have one transaction giving a coin and another one you receive a coin. This is an open problem.

The other alternative is Plasma Debit which was proposed by Dan Robinson a few months ago. Instead of having a coin that is just one bill, you can think of it as a … and instead of having like the Liquid is full and you can go from any value from zero to the capacity of the liquid. You can make arbitrary payments by.. increasing the other by the same amount. This also requires atomic payments. If we solve atomic payments then we can have both.

The other approach which is taken currently by some people is that instead of having one coin with some value, you take a coin and break it down into very small pieces. INstead of having one, you have very tiny pieces. When you transact, you transact in batches of coins. This is defragmentation or cashflow. The data on the client side grows linearly with the amount of fragments.

Reduce data requirements for light clients

The problem is that there’s linearly increasing proof size of coin history. This requires a lot of bandwidth and storage. So we need to find a solution to this. One thing you could do is checkpointing where you have the operator say the latest state and prove me wrong and you would make a signature where they attest to the latest state and then discard older data from before that. This requires a lot of communication overhead because the operator needs to talk with all parties and ask for consent to checkpoint the coin. They could implicitly say I’ll checkpoint everything, but then there are some other challenges.

Another approach is less frequent commitments. The safest thing to do is commit once every parent chain block. If you commit very fast, a miner could orphan a parent chain block and then this would orphan multiple Plasma chain transactions. So you should commit a plasma root once every 6 or 7 or 10 blocks or whatever is safe for you.

There’s some work from the Stanford crypto group on accumulators and vector commitments. So you would commit with each merkle block root, but also an RSA accumulator of coins moved, and then commit an RSA accumulator 100 blocks later, and if you see that a coin has not been accumulated since then, then you know there has been no transaction in between. Instead of transferring 100 merkle exclusion proof, you transfer only 1 RSA exclusion proof.

Or you could use zkSNARKs or STARKs to compress the whole history. But if you get to the point where you’re using this kind of technology, then maybe you should just use a totally different design anyway.

State channels and plasma?

What I have described so far is only for payments on the Plasma chain. There’s another proposal called state channels which is a superset of these protocols. If you can fund a channel from Plasma and you can settle a channel to Plasma, why is it different– I would claim it’s the same as doing smart contracts on Plasma because all you care about is that you get some value transacted. This has the advantage for Plasma that you could do smart contracts. You can open channels and close them with no cost because you’re already Plasma at zero-cost. But the requirement is that you need to create multisig accounts for escrow in Plasma and also timelocked UTXOs for non-cooperative cases. Maybe we could add Plasma script or miniscript, or maybe use scriptless script and hide the script inside the signature.


Plasma is a non-custodial sidechain where you notarize blocks and use a game to enforce safety which is guaranteed as long as one honest party within the whole dispute period is able to get a challenge into the main chain.

Off-chain gas-less fixed denomination payments with mainchain finality, no onboarding cost. Users must audit only the mainchain contract for fraud. Light client side validation is very light. Other plasma versions require full validation which is impractical for light clients.

WIP includes smart contracts, arbitrary payments, and better lite clients.