Decentralization Paradox: A Study of Hegemonic and Risky ERC-20 Tokens

TL;DR

This paper investigates the prevalence and risks of administrated ERC20 tokens on Ethereum, revealing most are owner-controlled and unsafe, and proposes a Solidity class to enhance their safety.

Contribution

It introduces a classifier for identifying administrated ERC20 tokens and develops SafelyAdministrated, a Solidity class to improve token safety.

Findings

Nearly 90% of ERC20 tokens are administrated and unsafe.

The classifier effectively identifies administrated tokens.

SafelyAdministrated mitigates risks from owner control.

Abstract

In this work, we explore the class of Ethereum smart contracts called the administrated ERC20 tokens. We demonstrate that these contracts are more owner-controlled and less safe than the services they try to disrupt, such as banks and centralized online payment systems. We develop a binary classifier for identification of administrated ERC20 tokens, and conduct extensive data analysis, which reveals that nearly 9 out of 10 ERC20 tokens on Ethereum are administrated, and thereby unsafe to engage with even under the assumption of trust towards their owners. We design and implement SafelyAdministrated - a Solidity abstract class that safeguards users of administrated ERC20 tokens from adversarial attacks or frivolous behavior of the tokens' owners.