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

From: ZmnSCPxj <[email-masked]>
Date: Thu, 25 Jun 2020 04:04:09 +0000

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