Subject: Re: [bitcoin-dev] [Lightning-dev] CheckTemplateVerify Does Not Scale Due to UTXO's Required For Fee Payment

From: ZmnSCPxj <[email-masked]>
Date: Tue, 30 Jan 2024 04:12:07 +0000

Good morning Michael et al,

> 
> I assume that a CTV based LN-Symmetry also has this drawback when compared to an APO based LN-Symmetry? In theory at least an APO based LN-Symmetry could change the fees in every channel update based on what the current market fee rate was at the time of the update. In today's pre LN-Symmetry world you are always going to have justice transactions for revoked states that were constructed when the market fee rate was very different from the present day's market fee rate.

This is the same in the future Decker-Russell-Osuntokun ("eltoo" / "LN-Symmetry") world as in the current Poon-Dryja ("LN-punishment").

Every *commitment* transaction in Poon-Dryja commits to a specific fee rate, which is why it it problematic today.
The *justice* transaction is single-signed and can (and SHOULD!) be RBF-ed (e.g. CLN implements an aggressive *justice* transaction RBF-ing written by me).

However, the issue is that every *commitment* transaction commits to a specific feerate today, and if the counterparty is offline for some time, the market feerate may diverge tremendously from the last signed feerate.

The same issue will still exist in Decker-Russell-Osuntokun --- the latest pair of update and state transactions will commit to a specific feerate.
If the counterparty is offline for some time, the market feerate may diverge tremendously from the last signed feerate.

Anchor commitments Fixes This by adding an otherwise-unnecessary change output (called "anchor output") for both parties to be able to attach a CPFP transaction.
However, this comes at the expense of increased blockspace usage for the anchor outputs.

Peter Todd proposes to sign multiple versions of offchain transactions at varying feerates.
However, this proposal has the issue that if you are not the counterparty paying for onchain fees (e.g. the original acceptor of the channel, as per "initiator pays" principle), then you have no disincentive to just use the highest-feerate version always, and have a tiny incentive to only store the signature for the highest-feerate version to reduce your own storage costs slightly.
In addition, it is also incentive-incompatible for the party that pays onchain fees to withhold signatures for the higher-fee versions, because if you are the party who does not pay fees and all you hold are the complete signatures for the lowest-fee version (because the counterparty does not want to trust you with signatures for higher-fee versions because you will just abuse it), then you will need anchor outputs again to bump up the fee.

The proposal from Peter Todd might work if both parties share the burden for paying the fees.
However, this may require that both parties always bring in funds on all channel opens, i.e. no single-sided funding.
I have also not considered how this game would play out, though naively, it seems to me that if both parties pay onchain fees "fairly" for some definition of "fair" (how to define "fair" may be problematic --- do they pay equal fees or proportional to their total funds held in the channel?) then it seems to me okay to have multi-feerate-version offchain txes (regardless of using Poon-Dryja or Decker-Russell-Osuntokun).
However, there may be issues with hosting HTLCs; technically HTLCs are nested inside a larger contract (the channel) and if so, do you need a separate transaction to resolve them (Poon-Dryja does!) and do you also have to multi-feerate *in addition to* multi-feerate the outer transaction (e.g. commitment transaction in Poon-Dryja) resulting in a O(N * N) transactions for N feerates?

Regards,
ZmnSCPxj