The Challenge-Handshake Authentication Protocol (CHAP) is used to periodically verify the identity of the peer using a 3-way handshake. This is done upon initial link establishment, and MAY be repeated anytime after the link has been established.
After the Link Establishment phase is complete, the authenticator sends a "challenge" message to the peer. The peer responds with a value calculated using a "one-way hash" function. The authenticator checks the response against its own calculation of the expected hash value. If the values match, the authentication is acknowledged; otherwise the connection SHOULD be terminated.
CHAP provides protection against playback attack through the use of an incrementally changing identifier and a variable challenge value. The use of repeated challenges is intended to limit the time of exposure to any single attack. The authenticator is in control of the frequency and timing of the challenges.
This authentication method depends upon a "secret" known only to the authenticator and that peer. The secret is not sent over the link. This method is most likely used where the same secret is easily accessed from both ends of the link.
The CHAP algorithm requires that the length of the secret MUST be at least 1 octet. The secret SHOULD be at least as large and unguessable as a well-chosen password. It is preferred that the secret be at least the length of the hash value for the hashing algorithm chosen (16 octets for MD5). This is to ensure a sufficiently large range for the secret to provide protection against exhaustive search attacks.
The one-way hash algorithm is chosen such that it is computationally infeasible to determine the secret from the known challenge and response values.
The challenge value SHOULD satisfy two criteria: uniqueness and unpredictability. Each challenge value SHOULD be unique, since repetition of a challenge value in conjunction with the same secret would permit an attacker to reply with a previously intercepted response. Since it is expected that the same secret MAY be used to authenticate with servers in disparate geographic regions, the challenge SHOULD exhibit global and temporal uniqueness. Each challenge value SHOULD also be unpredictable, least an attacker trick a peer into responding to a predicted future challenge, and then use the response to masquerade as that peer to an authenticator. Although protocols such as CHAP are incapable of protecting against realtime active wiretapping attacks, generation of unique unpredictable challenges can protect against a wide range of active attacks.
A discussion of sources of uniqueness and probability of divergence is included in the Magic-Number Configuration Option .