Subject: [bitcoin-dev] Why Full-RBF Makes DoS Attacks on Multiparty Protocols Significantly More Expensive

From: Peter Todd <[email-masked]>
Date: Mon, 9 Jan 2023 17:18:52 -0500

I was reminded recently that while Suhas Daftuar cited tx-pinning as a reason
to remove full-rbf, he neglected to mention that tx-pinning greatly increases
the cost of attacks on multi-party protocols. Him (rhetorically?) asking(4):

    "Does fullrbf offer any benefits other than breaking zeroconf business
     practices?"

...has caused a lot of confusion by implying that there were no benefits. So
I'm writing this to set the record straight and provide an easily cited
explanation as to why full-rbf - even with tx-pinning - is a valuable
improvement for multi-party protocols like coinjoins that rely on transactions
containing multiple inputs exclusively controlled(1) by different parties.

tl;dr: without full-rbf people can intentionally and unintentionally DoS attack
multi-party protocols by double-spending their inputs with low-fee txs, holding
up progress until that low-fee tx gets mined. This could take days, weeks, or
even worse. Modulo intentional tx-pinning, full-RBF fixes this by ensuring that
a higher fee transaction gets mined in a reasonable amount of time so the
protocol makes forward progress. And as for tx-pinning, exploiting it is very
expensive, so full-rbf still makes the situation much better than the status
quo.

# The Double-Spend DoS Attack on Multi-Party, Multi-Input, Transactions

If a protocol constructs transactions containing multiple inputs exclusively
controlled by different parties, those parties can intentionally and
unintentionally double-spend those inputs in alternate transactions. For
example, in a Wasabi coinjoin any one of the hundreds of participants could
sign and broadcast a transaction spending their input. If they do that at the
right time, as much as ~100% of the hashing power may see the double-spend
first, prior to the intended coinjoin transaction. This in fact does happen
regularly in production to Wasabi coinjoins, probably due to people
accidentally running different wallets at the same time using the same seed, as
well as people importing their seeds into alternative wallets.

By itself this isn't a significant problem: Wasabi coinjoins are a two phase
protocol, and, like any multi-step, multi-party protocol, they have to deal
with the fact that participants in the protocol may fail to complete all the
steps necessary for a transaction to be completed. It's very common for one or
more parties in a Wasabi coinjoin to fail to complete both steps of the
protocol, and a majority of Wasabi coinjoin rounds fail. Wasabi deals with this
economically by (temporarily or ~permanently) blacklisting UTXOs that failed to
complete a round, making DoS attacks expensive by forcing the attacker to tie
up funds/create new UTXOs.

Similarly, in use-cases such as multi-party-funded Lightning channels(5), an
attacker can always DoS attack the protocol by participating in a channel open,
and then failing to allow payments to be routed through it. The solution is
again to use economics to ensure the attack is sufficiently costly.

However, under the right circumstances double-spends are an unusually powerful
DoS attack on multi-party, multi-input, transaction. When mempool demand is
high, low fee transactions can take arbitrarily long to get mined. Bitcoin has
seen periods of mempool demand where low-fee transactions would take *months*
to get mined. Transaction expiry does not solve this problem, as anyone can
rebroadcast transactions at any time. In these circumstances without
transaction replacement a multi-party transaction such as a Wasabi coinjoin
could be held up indefinitely by a low-fee double-spend.

## How Full-RBF Mitigates the Double-Spend DoS Attack

Modulo tx-pinning, full-rbf mitigates the double-spend DoS attack in a very
straightforward way: the low fee transaction is replaced by the higher fee
transaction, resulting in the latter getting mined in a reasonable amount of
time and the protocol making forward progress.

Note that the converse is not a useful attack: if the attacker broadcasts a
high-fee double spend, higher than the intended multi-party transaction, the
transaction will get mined in a reasonable amount of time, costing the attacker
money and the defender nothing beyond wasted time. Multi-party protocols always
have the property that attackers can spend money to DoS attack by creating more
UTXOs/identities/etc, so this isn't any worse than the status quo!

## Transaction Pinning

So what about transaction pinning? The term actually refers to a few different
techniques that can make it difficult/expensive to fee-bump a transaction.
We're interested in the techniques relevant to replacements, namely
exploitation of:

1. BIP-125 RBF Rule #3: a replacement transaction is required to pay
the higher absolute fee (not just fee rate) than the sum of fees paid by all
transactions being replaced.

2. BIP-125 RBF Rule #5: the number of transactions replaced at one time must
not exceed 100. Note that this rule only exists due to limitations of the
existing Bitcoin Core implementation; it has absolute no economic rational and
should be removed by either improving the implementation's scalability issues,
or rejecting transactions that could make a transaction unreplaceable(2).

Exploiting either rule is expensive. To exploit rule #3 the attacker has to
broadcast fee-paying transactions paying a total amount of fees higher than the
defender is willing to pay. Since transactions don't expire, in almost all
circumstances those transactions will eventually be mined, costing the attacker
much more money than they would have spent without full-rbf.

To exploit rule #5, the attacker has to broadcast 100x more fee-paying
transactions than they otherwise would have. As with rule #3, those
transactions will almost always eventually be mined, costing the attacker
significantly more money than they would have spent without full-rbf. And, as
mentioned above(2), rule #5 is merely an artifact of the existing
implementation which can and should be fixed.

The only avenue for an attacker to avoid transaction pinning costs is
amortisation: reusing the extra transactions required for pinning for other
attacks/other purposes. But of course, amortisation is *already* a potent cost
reduction strategy for attacks on multi-party protocols such as coinjoin, so
the existence of transaction pinning doesn't appreciably change the situation.
Again, there are mitigations such as requiring participants to post nLockTime'd
fee-paying transactions(3), and limiting attacks to parties who are heavily
invested in Bitcoin for other reasons is a valuable improvement on the status
quo.

# Conclusion

Far from not "offering any benefits other than breaking zeroconf business
practices"(4), full-rbf clearly improves Bitcoin for multi-party protocols,
among the many other reasons to adopt it.

# Footnotes

1. What do I mean by "exclusively controlled"? Let's compare coinjoin, to an
   ordinary single-payer Lightning channel. In a coinjoin, the goal is to get a
   transaction mined containing multiple inputs from different parties. Each of
   these inputs is individually, exclusively controlled by a single party:
   without the cooperation of any other party that input that be spend. This is
   unlike an ordinary single-payer Lightning channel: while the commitment
   transactions are multi-party transactions, the multisig transaction outputs
   involved are *jointly* controlled by both parties, and thus neither party can
   spend it without the cooperation of the other at some point.

2. [bitcoin-dev] Removing BIP-125 Rule #5 Pinning with the Always-Replaceable
   Invariant, https://lists.linuxfoundation.org/pipermail/bitcoin-dev/2022-November/021175.html

3. [bitcoin-dev] Using Full-RBF to fix BIP-125 Rule #3 Pinning with nLockTime,
   https://lists.linuxfoundation.org/pipermail/bitcoin-dev/2022-November/021176.html

4. https://github.com/bitcoin/bitcoin/pull/26438

5. There are even more exotic proposed Lightning-related protocols where a failure
   of transaction replacement can cause the loss of funds. I'm not covering
   those scenarios because they have such strong requirements - beyond what
   full-rbf offers - that the technical community does not have consensus that
   these proposed protocols are even viable.

-- 
https://petertodd.org 'peter'[:-1]@petertodd.org