Distributed Key Generation with Smart Contracts using zk-SNARKs

Abstract: Distributed Key Generation (DKG) is an extensively researched topic as it is fundamental to threshold cryptosystems. Emerging technologies such as blockchains benefit massively from applying threshold cryptography in consensus protocols, randomness beacons, and threshold signatures. However, blockchains and smart contracts also enable further improvements of DKG protocols by providing a decentralized computation and communication platform. For that reason, we propose a DKG protocol that uses smart contracts to ensure the correct execution of the protocol, allow dynamic participation, and provide crypto-economic incentives to encourage honest behavior. The DKG protocol uses a dispute and key derivation mechanism based on Zero-Knowledge Succinct Non-interactive Arguments of Knowledge (zk-SNARKs) to reduce the costs of applying smart contracts by moving the computations off-chain, where the smart contract only verifies the correctness of the computation.