Subject: Re: [bitcoin-dev] [Pre-BIP] Fee Accounts

From: Jeremy <[email-masked]>
Date: Wed, 19 Jan 2022 12:08:23 -0800

SIGHASH_BUNDLE
https://lists.linuxfoundation.org/pipermail/bitcoin-dev/2018-April/015862.html

By cycles I meant that if you commit to the sponsors by TXID from the
witness, you could "sponsor yourself" directly or through a cycle involving
> 1 txn.

With OP_VER I was talking about the proposal I linked here
https://lists.linuxfoundation.org/pipermail/bitcoin-dev/2020-September/018168.html
which used OP_VER to indicate a txn sponsoring txn. Because the OP_VER is
in the output space, and uses TXIDs, it is cycle-free.

--
@JeremyRubin <https://twitter.com/JeremyRubin>
<https://twitter.com/JeremyRubin>

On Wed, Jan 19, 2022 at 8:52 AM Billy Tetrud <[email-masked]> wrote:

> Hmm, I don't know anything about  SIGHASH_BUNDLE. The only references
> online I can find are just mentions (mostly from you). What is
> SIGHASH_BUNDLE?
>
> > unless you're binding a WTXID
>
> That could work, but it would exclude cases where you have a transaction
> that has already been partially signed and someone wants to, say, only sign
> that transaction if some 3rd party signs a transaction paying part of the
> fee for it. Kind of a niche use case, but it would be nice to support it if
> possible. If the transaction hasn't been signed at all yet, a new
> transaction can just be created that includes the prospective fee-payer,
> and if the transaction is fully signed then it has a WTXID to use.
>
> > then you can have fee bumping cycles
>
> What kind of cycles do you mean? You're saying these cycles would make it
> less robust to reorgs?
>
> > OP_VER
>
> I assume you mean something other than pushing the version onto the stack
> <https://bitcoin.stackexchange.com/questions/97258/given-op-ver-was-never-used-is-disabled-and-not-considered-useful-can-its-meani>?
> Is that related to your fee account idea?
>
>
> On Wed, Jan 19, 2022 at 1:32 AM Jeremy <[email-masked]> wrote:
>
>> Ah my bad i misread what you were saying as being about SIGHASH_BUNDLE
>> like proposals.
>>
>> For what you're discussing, I previously proposed
>> https://lists.linuxfoundation.org/pipermail/bitcoin-dev/2020-September/018168.html
>> which is similar.
>>
>> The benefit of the OP_VER output is that SIGHASH_EXTERNAL has the issue
>> that unless you're binding a WTXID (which is maybe too specific?) then you
>> can have fee bumping cycles. Doing OP_VER output w/ TXID guarantees that
>> you are acyclic.
>>
>> The difference between a fee account and this approach basically boils
>> down to the impact on e.g. reorg stability, where the deposit/withdraw
>> mechanism is a bit more "robust" for reorderings in reorgs than the in-band
>> transaction approach, although they are very similar.
>>
>> --
>> @JeremyRubin <https://twitter.com/JeremyRubin>
>> <https://twitter.com/JeremyRubin>
>>
>>
>> On Tue, Jan 18, 2022 at 8:53 PM Billy Tetrud <[email-masked]>
>> wrote:
>>
>>> >  because you make transactions third party malleable it becomes
>>> possible to bundle and unbundle transactions.
>>>
>>> What I was suggesting doesn't make it possible to malleate someone
>>> else's transaction. I guess maybe my proposal of using a sighash flag
>>> might have been unclear. Imagine it as a script opcode that just says "this
>>> transaction must be mined with this other transaction" - the only
>>> difference being that you can use any output with any encumberance as an
>>> input for fee bumping. It doesn't prevent the original transaction from
>>> being mined on its own. So adding junk inputs would be no more of a problem
>>> than dust attacks already are. It would be used exactly like cpfp, except
>>> it doesn't spend the parent.
>>>
>>> I don't think what I was suggesting is as different from your proposal.
>>> All the problems of fee revenue optimization and feerate rules that you
>>> mentioned seem like they'd also exist for your proposal, or for cpfp. Let
>>> me know if I should clarify further.
>>>
>>> On Tue, Jan 18, 2022 at 8:51 PM Jeremy <[email-masked]> wrote:
>>>
>>>> The issue with sighash flags is that because you make transactions
>>>> third party malleable it becomes possible to bundle and unbundle
>>>> transactions.
>>>>
>>>> This means there are circumstances where an attacker could e.g. see
>>>> your txn, and then add a lot of junk change/inputs + 25 descendants and
>>>> strongly anchor your transaction to the bottom of the mempool.
>>>>
>>>> because of rbf rules requiring more fee and feerate, this means you
>>>> have to bump across the whole package and that can get really messy.
>>>>
>>>> more generally speaking, you could imagine a future where mempools
>>>> track many alternative things that might want to be in a transaction.
>>>>
>>>> suppose there are N inputs each with a weight and an amount of fee
>>>> being added and the sighash flags let me pick any subset of them. However,
>>>> for a txn to be standard it must be < 100k bytes and for it to be consensus
>>>> < 1mb. Now it is possible you have to solve a knapsack problem in order to
>>>> rationally bundle this transaction out of all possibilities.
>>>>
>>>> This problem can get even thornier, suppose that the inputs I'm adding
>>>> themselves are the outputs of another txn in the mempool, now i have to
>>>> track and propagate the feerates of that child back up to the parent txn
>>>> and track all these dependencies.
>>>>
>>>> perhaps with very careful engineering these issues can be tamed.
>>>> however it seems with sponsors or fee accounts, by separating the pays-for
>>>> from the participates-in concerns we can greatly simplify it to something
>>>> like: compute effective feerate for a txn, including all sponsors that pay
>>>> more than the feerate of the base txn. Mine that txn and it's subsidies
>>>> using the normal algo. If you run out of space, all subsidies are
>>>> same-sized so just take the ones that pay the highest amount up until the
>>>> added marginal feerate is less than the next eligible txn.
>>>>
>>>>
>>>> --
>>>> @JeremyRubin <https://twitter.com/JeremyRubin>
>>>> <https://twitter.com/JeremyRubin>
>>>>
>>>>
>>>> On Tue, Jan 18, 2022 at 6:38 PM Billy Tetrud <[email-masked]>
>>>> wrote:
>>>>
>>>>> I see, its not primarily to make it cheaper to append fees, but also
>>>>> allows appending fees in cases that aren't possible now. Is that right? I
>>>>> can certainly see the benefit of a more general way to add a fee to any
>>>>> transaction, regardless of whether you're related to that transaction or
>>>>> not.
>>>>>
>>>>> How would you compare the pros and cons of your account-based approach
>>>>> to something like a new sighash flag? Eg a sighash flag that says "I'm
>>>>> signing this transaction, but the signature is only valid if mined in the
>>>>> same block as transaction X (or maybe transactions LIST)". This could be
>>>>> named SIGHASH_EXTERNAL. Doing this would be a lot more similar to other
>>>>> bitcoin transactions, and no special account would need to be created. Any
>>>>> transaction could specify this. At least that's the first thought I would
>>>>> have in designing a way to arbitrarily bump fees. Have you compared your
>>>>> solution to something more familiar like that?
>>>>>
>>>>> On Tue, Jan 18, 2022 at 11:43 AM Jeremy <[email-masked]> wrote:
>>>>>
>>>>>> Can you clarify what you mean by "improve the situation"?
>>>>>>
>>>>>> There's a potential mild bytes savings, but the bigger deal is that
>>>>>> the API should be much less vulnerable to pinning issues, fix dust leakage
>>>>>> for eltoo like protocols, and just generally allow protocol designs to be
>>>>>> fully abstracted from paying fees. You can't easily mathematically
>>>>>> quantify API improvements like that.
>>>>>> --
>>>>>> @JeremyRubin <https://twitter.com/JeremyRubin>
>>>>>> <https://twitter.com/JeremyRubin>
>>>>>>
>>>>>>
>>>>>> On Tue, Jan 18, 2022 at 8:13 AM Billy Tetrud <[email-masked]>
>>>>>> wrote:
>>>>>>
>>>>>>> Do you have any back-of-the-napkin math on quantifying how much this
>>>>>>> would improve the situation vs existing methods (eg cpfp)?
>>>>>>>
>>>>>>>
>>>>>>>
>>>>>>> On Sat, Jan 1, 2022 at 2:04 PM Jeremy via bitcoin-dev <
>>>>>>> [email-masked]> wrote:
>>>>>>>
>>>>>>>> Happy new years devs,
>>>>>>>>
>>>>>>>> I figured I would share some thoughts for conceptual review that
>>>>>>>> have been bouncing around my head as an opportunity to clean up the fee
>>>>>>>> paying semantics in bitcoin "for good". The design space is very wide on
>>>>>>>> the approach I'll share, so below is just a sketch of how it could work
>>>>>>>> which I'm sure could be improved greatly.
>>>>>>>>
>>>>>>>> Transaction fees are an integral part of bitcoin.
>>>>>>>>
>>>>>>>> However, due to quirks of Bitcoin's transaction design, fees are a
>>>>>>>> part of the transactions that they occur in.
>>>>>>>>
>>>>>>>> While this works in a "Bitcoin 1.0" world, where all transactions
>>>>>>>> are simple on-chain transfers, real world use of Bitcoin requires support
>>>>>>>> for things like Fee Bumping stuck transactions, DoS resistant Payment
>>>>>>>> Channels, and other long lived Smart Contracts that can't predict future
>>>>>>>> fee rates. Having the fees paid in band makes writing these contracts much
>>>>>>>> more difficult as you can't merely express the logic you want for the
>>>>>>>> transaction, but also the fees.
>>>>>>>>
>>>>>>>> Previously, I proposed a special type of transaction called a
>>>>>>>> "Sponsor" which has some special consensus + mempool rules to allow
>>>>>>>> arbitrarily appending fees to a transaction to bump it up in the mempool.
>>>>>>>>
>>>>>>>> As an alternative, we could establish an account system in Bitcoin
>>>>>>>> as an "extension block".
>>>>>>>>
>>>>>>>> *Here's how it might work:*
>>>>>>>>
>>>>>>>> 1. Define a special anyone can spend output type that is a "fee
>>>>>>>> account" (e.g. segwit V2). Such outputs have a redeeming key and an amount
>>>>>>>> associated with them, but are overall anyone can spend.
>>>>>>>> 2. All deposits to these outputs get stored in a separate UTXO
>>>>>>>> database for fee accounts
>>>>>>>> 3. Fee accounts can sign only two kinds of transaction: A: a fee
>>>>>>>> amount and a TXID (or Outpoint?); B: a withdraw amount, a fee, and
>>>>>>>> an address
>>>>>>>> 4. These transactions are committed in an extension block merkle
>>>>>>>> tree. While the actual signature must cover the TXID/Outpoint, the
>>>>>>>> committed data need only cover the index in the block of the transaction.
>>>>>>>> The public key for account lookup can be recovered from the message +
>>>>>>>> signature.
>>>>>>>> 5. In any block, any of the fee account deposits can be: released
>>>>>>>> into fees if there is a corresponding tx; consolidated together to reduce
>>>>>>>> the number of utxos (this can be just an OP_TRUE no metadata needed); or
>>>>>>>> released into fees *and paid back* into the requested withdrawal key
>>>>>>>> (encumbering a 100 block timeout). Signatures must be unique in a block.
>>>>>>>> 6. Mempool logic is updated to allow attaching of account fee
>>>>>>>> spends to transactions, the mempool can restrict that an account is not
>>>>>>>> allowed more spend more than it's balance.
>>>>>>>>
>>>>>>>> *But aren't accounts "bad"?*
>>>>>>>>
>>>>>>>> Yes, accounts are bad. But these accounts are not bad, because any
>>>>>>>> funds withdrawn from the fee extension are fundamentally locked for 100
>>>>>>>> blocks as a coinbase output, so there should be no issues with any series
>>>>>>>> of reorgs. Further, since there is no "rich state" for these accounts, the
>>>>>>>> state updates can always be applied in a conflict-free way in any order.
>>>>>>>>
>>>>>>>>
>>>>>>>> *Improving the privacy of this design:*
>>>>>>>>
>>>>>>>> This design could likely be modified to implement something like
>>>>>>>> Tornado.cash or something else so that the fee account paying can be
>>>>>>>> unlinked from the transaction being paid for, improving privacy at the
>>>>>>>> expense of being a bit more expensive.
>>>>>>>>
>>>>>>>> Other operations could be added to allow a trustless mixing to be
>>>>>>>> done by miners automatically where groups of accounts with similar values
>>>>>>>> are trustlessly  split into a common denominator and change, and keys are
>>>>>>>> derived via a verifiable stealth address like protocol (so fee balances can
>>>>>>>> be discovered by tracing the updates posted). These updates could also be
>>>>>>>> produced by individuals rather than miners, and miners could simply honor
>>>>>>>> them with better privacy. While a miner generating an update would be able
>>>>>>>> to deanonymize their mixes, if you have your account mixed several times by
>>>>>>>> independent miners that could potentially add sufficient privacy.
>>>>>>>>
>>>>>>>> The LN can also be used with PTLCs to, in theory, have another
>>>>>>>> individual paid to sponsor a transaction on your behalf only if they reveal
>>>>>>>> a valid sig from their fee paying account, although under this model it's
>>>>>>>> hard to ensure that the owner doesn't pay a fee and then 'cancel' by
>>>>>>>> withdrawing the rest. However, this could be partly solved by using
>>>>>>>> reputable fee accounts (reputation could be measured somewhat
>>>>>>>> decentralized-ly by longevity of the account and transactions paid for
>>>>>>>> historically).
>>>>>>>>
>>>>>>>> *Scalability*
>>>>>>>>
>>>>>>>> This design is fundamentally 'decent' for scalability because
>>>>>>>> adding fees to a transaction does not require adding inputs or outputs and
>>>>>>>> does not require tracking substantial amounts of new state.
>>>>>>>>
>>>>>>>> Paying someone else to pay for you via the LN also helps make this
>>>>>>>> more efficient if the withdrawal issues can be fixed.
>>>>>>>>
>>>>>>>> *Lightning:*
>>>>>>>>
>>>>>>>> This type of design works really well for channels because the
>>>>>>>> addition of fees to e.g. a channel state does not require any sort of
>>>>>>>> pre-planning (e.g. anchors) or transaction flexibility (SIGHASH flags).
>>>>>>>> This sort of design is naturally immune to pinning issues since you could
>>>>>>>> offer to pay a fee for any TXID and the number of fee adding offers does
>>>>>>>> not need to be restricted in the same way the descendant transactions would
>>>>>>>> need to be.
>>>>>>>>
>>>>>>>> *Without a fork?*
>>>>>>>>
>>>>>>>> This type of design could be done as a federated network that
>>>>>>>> bribes miners -- potentially even retroactively after a block is formed.
>>>>>>>> That might be sufficient to prove the concept works before a consensus
>>>>>>>> upgrade is deployed, but such an approach does mean there is a centralizing
>>>>>>>> layer interfering with normal mining.
>>>>>>>>
>>>>>>>>
>>>>>>>> Happy new year!!
>>>>>>>>
>>>>>>>> Jeremy
>>>>>>>>
>>>>>>>> --
>>>>>>>> @JeremyRubin <https://twitter.com/JeremyRubin>
>>>>>>>> <https://twitter.com/JeremyRubin>
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>>>>>>>>
>>>>>>>