Everyone in the Aeon community needs to familiarize themselves with the Monero Labs research release #1:
https://lab.getmonero.org/pubs/MRL-0001.pdf Specifically this part on pages 6 & 7:
"
Chain reactions act slower and slower as mixins increase. Thus, a single mixin is inappropriate for any currency problem, because an anonymous, malicious user may spam the network with transactions they control in the hopes that they eventually control greater proportions of the UTXO set. This would essentially make all transactions from then on fully traceable (at least from Burns’ point of view), and Burns doesn’t have to take a single action after his initial seed transactions are planted in the UTXO set. This fixed initial cost for the attacker leading to a never-ending stream of information in the form of traceable transactions from other users is, clearly, a catastrophic economic failure. This is so important, we are putting it in italics: any CryptoNote coin that allows for only 1 mixin is vulnerable to a slow chain reaction in which the owner of very few private keys can violate the untraceability of much larger number of other users. Requiring a mixin of at least 2 for all transactions save for transactions that are willfully spent with 0 mixins will keep these chain reactions, probabilistically, to a smaller length. Indeed, any number greater than 1 will do, to force these chain reactions to burn themselves out, rather than to spread to the whole network, and the higher the better. Of course, a protocol-enforced, network-wide mandatory minimimum mixin of M = 10 would, presumably, cause a blockchain bloat, which can hinder adoption, which has it’s own security benefits in terms of network size. Hence, there is likely some optimal size of mandatory minimum mixin. We do no more than to suggest M = 2 as a protocol-enforced mandatory minimum, and to advise users to use as many mixin signatures as their little hearts desire."
This was a big problem with Monero and they fixed it by mandating the recommended number of mixins. However as of this moment the Aeon Blockchain has arguably worse privacy than Bitcoin. At least with Bitcoin it is understood that your transactions are traceable, and people have little expectation of privacy anymore. The problem with Aeon is that people may have an expectation of privacy, which can subsequently be violated by powerful and prepared actors, while small fish remain unaware of what is going on.
This is simply unacceptable for what aims to be a global standard. I hope that as the largest public owner of Aeon my concerns ring genuine. To FUD this blockchain is inherently a self-defeating measure, so this issue should be taken seriously.
My recommendation to devs, including smooth, is this: Either incorporate mandatory mixin or let's mandate zero mixin. If we mandate zero mixin, then Aeon becomes the fabled 'clearnote protocol' that truly can be a powerful companion to Monero and incorporate radical pruning that the Monero blockchain could never approach.
I am welcome to comments, criticisms, and ideas here.
Crosspost from:
https://www.reddit.com/r/Aeon/comments/5u20b0/we_have_a_serious_issue_that_needs_to_be/
Smooth's response on this issue: AEON's solution addresses the problem identified in MRL-0001. By allowing only one 0-mix transaction per block (when there can, and will assuming AEON becomes a "global standard", be many txs per block), the average ring size will be high enough to ensure that any attacker's existing known output set (the attack discussed) "burns out". MRL-0001 is also overly conservative in its calculations as it does not consider that outputs are currently chosen using a triangular distribution (favoring the new "burned out" outputs) as this was added after MRL-0001 was written. Given the combined effect the "burn out" will occur at an even faster rate for a given average ring size than is shown on the chart n the paper.
The possible attack is then reduced to an ongoing Sybil attack where (unlike a situation where there is a high number of 0- and 1- mix transactions) the attacker must incur an ongoing cost to create more and more new outputs. This is essentially the same situation as banning 0-mix altogether except that the average ring size will be slightly smaller and therefore the burn out rate also slightly slower.
I do not believe we need to remove 0-mix transactions altogether and I also believe we can further improve things to expand their use in a safe manner which will bring most of the benefits of what you describe as the clear note protocol without dropping larger ring sigs altogether. Done right the two can coexist.