An Insight into the Litecoin Network Dust Attack.

Last week on the 10th of August, the Litecoin Network experienced a ‘Dust Attack’, a method by where a small amount of litecoin is deposited into a large number of addresses on the network in an attempt to de-anonymise network participants.

The small dust transaction Ł0.00000546 ($0.0004025) is smaller than a transaction fee, meaning it cannot be spent without being included with other coins held by the user. This in turn, allows the attacker insights into how many people are on the network, how many addresses they have and how much value they hold to name but a few data points. It’s not necessary to use dusting techniques to surveil the network as it is possible to achieve the same outcome with other methods. Dusting, however, does certainly speed the process up, but in turn lets others who quietly monitor the network have an even greater insight on the attacker.

The Attack was first noticed and reported by James Jager, the project lead at Binance Academy who said in a statement to CoinTelegraph:

“It was network-wide, which meant it affected all users of litecoin that had an active litecoin address at the time. The address of the person responsible for the dusting attack can be found here: https://blockchair.com/litecoin/address/LeEMCDHmvDb2MjhVHGphYmoGeGFvdTuk2K”
“We became aware of the dusting attack on Saturday morning when one of our binance angels had received a small amount of LTC into their litecoin wallet.”

Despite the initial claims, we can confidently report that not all users were effected and with further insights provided by Jan Happel, co-founder of blockchain analysis company Glassnode, it appears approximately 300,000 LTC addresses show signs of dusting. If accurate it would mean the attack consumed roughly Ł1.638 or $120.9 as of writing.

“We have done a quick query into the LTC blockchain and analyzed the number of utxo’s that carry a smaller value than the mean tx fee that day. If a UTXO contains less balance than the minimum amount required to spend it (fee) that day, it becomes stuck/unspendable — this is what we technically define as dust.”

This is not the first time a dust attack has occurred on the network. The last confirmed large scale attack occurred on April 7th 2019 and can be seen by the anomalous spike it caused in the sent from addresses according to data provided by bitinfocharts. On this day the metric peaked at just over 130,000 addresses compared to the typical 40,000 daily.

Whilst this type of surveillance is inescapable participants using the Litecoin Core full node client do have the option to ignore the transaction through the terminal, effectively isolating it forever. Similarly, wallets such as Samurai also enable this feature and they encourage its use whenever their bitcoin users get dusted.

Chances are your crypto activity is already being stored and grouped by some private company or government for one use or another somewhere and that’s to be expected from the most open financial system to ever exist. However, with the advent of new cryptographic obfuscation methods such as Confidential transactions and MimbleWimble, developers are already working on ways to make it harder for these attackers to mine our financial data.