Subject: Re: [bitcoin-dev] MAD-HTLC

From: Bastien TEINTURIER <[email-masked]>
Date: Thu, 25 Jun 2020 15:12:56 +0200

Good morning list,

This is an interesting and simple idea, thanks for sharing this paper!

However I think there are a couple of important issues (but it could be me
misunderstanding):

* the assumption that the mempool is a shared resource is flawed: it's
entirely possible
  to have very different mempools in different areas of the network, for a
potentially long
  period of time (see the RBF pinning thread [1]), and an attacker can
leverage this fact
* a corollary is that Bob may not know that Alice has published her
transaction, and will
  end up publishing his timeout tx, unknowingly giving the two preimages to
the miners
* a corollary of that is a very unhealthy incentive to miners, when they
receive an HTLC
  success tx, to always wait for the timeout before confirming the
transaction, in hope that
  they'll receive the second preimage and will be able to claim the funds
for themselves
  (whereas currently they don't gain anything by waiting before confirming
these txs)

To be fair the paper states that it doesn't address issues of malicious
miners or an attacker
colluding with a miner, but I think that even honest miners now have an
unhealthy incentive
regarding htlc success confirmation.

Let me know if I misunderstood something, or if you have ideas on how to
explore that
threat model in the future.

Cheers,
Bastien

[1]
https://lists.linuxfoundation.org/pipermail/lightning-dev/2020-April/002639.html

Le jeu. 25 juin 2020 à 14:45, Nadav Ivgi via bitcoin-dev <
[email-masked]> a écrit :

> Hi ZmnSCPxj,
>
> You are of course correct. I had considered the effect of reorgs, but the
> email seemed to be getting too lengthy to mention that too.
>
> You would need a few spare blocks in which Bob won't be accused of bribery
> as a safety margin, which does reduce the time frame in which Alice can get
> her transaction confirmed in order to have a valid bribery fraud. This
> seems workable if the time frame was long enough (over a few hours should
> be sufficient, assuming we consider reorgs of over 3-4 blocks to be
> unlikely), but could indeed be problematic if the time frame is already
> short to begin with.
>
> Nadav
>
> On Thu, Jun 25, 2020 at 7:04 AM ZmnSCPxj <[email-masked]> wrote:
>
>> Good morning Nadav,
>>
>> > > I and some number of Lightning devs consider this to be sufficient
>> disincentive to Bob not attacking in the first place.
>> >
>> > An additional disincentive could be introduced in the form of bribery
>> proofs for failed attempts.
>> >
>> > If we assume that "honest" users of the LN protocol won't reveal their
>> timelocked transactions before reaching the timelock expiry (they shouldn't
>> anyway because standard full node implementations won't relay them), we can
>> prove that Bob attempted bribery and failed to an outside observer by
>> showing Bob's signed timelocked transaction, spending an output that was in
>> reality spent by a different transaction prior to the locktime expiry,
>> which should not be possible if Bob had waited.
>>
>>
>> Unfortunately this could be subject to an inversion of this attack.
>>
>> Alice can wait for the timelock to expire, then bribe miners to prevent
>> confirmation of the Bob timelocked transaction, getting the Alice
>> hashlocked transaction confirmed.
>>
>> Now of course you do mention "prior to the locktime expiry" but there is
>> now risk at around locktime.
>>
>> Particularly, "natural" orphaned blocks and short-term chainsplits can
>> exist.
>> Bob might see that the locktime has arrived and broadcast the signed
>> timelocked transaction, then Alice sees the locktime has not yet arrived
>> (due to short-term chainsplits/propagation delays) and broadcast the signed
>> hashlocked transaction, then in the end the Alice side of the short-term
>> chainsplit is what solidifies into reality due to random chance on which
>> miner wins which block.
>> Then Bob can now be accused of bribery, even though it acted innocently;
>> it broadcasted the timelock branch due to a natural chainsplit but Alice
>> hashlocked branch got confirmed.
>>
>> Additional complications can be added on top to help mitigate this edge
>> case but more complex == worse in general.
>> For example it could "prior to locktime expiry" can ignore a few blocks
>> before the actual timelock, but this might allow Bob to mount the attack by
>> initiating its bribery behavior earlier by those few blocks.
>>
>> Finally, serious attackers would just use new pseudonyms, the important
>> thing is to make pseudonyms valuable and costly to lose, so it is
>> considered sufficient that LN nodes need to have some commitment to the LN
>> in the form of actual channels (which are valuable, potentially
>> money-earning constructs, and costly to set up).
>>
>> Other HTLC-using systems, such as the "SwapMarket" being proposed by
>> Chris Belcher, could use similar disincentivizing; I know Chris is planning
>> a fidelity bond system for SwapMarket makers, for example, which would
>> mimic the properties of LN channels (costly to set up, money-earning).
>>
>> Regards,
>> ZmnSCPxj
>>
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