Subject: [bitcoindev] Keyless Anchors Are Vulnerable To Replacement Cycling Attacks

From: Peter Todd <[email-masked]>
Date: Fri, 2 Aug 2024 07:54:28 +0000

This feels like someone should have published it before. But I can't find an
obvious citation (eg in any of the documentation around keyless ephemeral
anchors), so I'll publish one here. Maybe I'm the first to point this out
explicitly? Probably not; I'd appreciate an earlier citation if one exists.

tl;dr: _Anyone_ can do a replacement cycling attack on transactions where fees
are paid via CPFP via keyless anchors and similar outputs that a third-party
can double-spend. Secondly, for attackers who were already planning on making a
transaction with a higher total fee and total fee-rate than the target, this
attack is almost free.

# The Attack

Suppose that Alice has created a 2 transaction package consisting of low-fee or
zero-fee transaction A, whose fees are CPFP paid via a keyless ephemeral anchor
spent by transaction B. For B to pay fees, obviously it must spend a second
transaction output.

Mallory can cycle A and B out of mempools by broadcasting transaction B2,
spending his own output and the keyless ephemeral anchor of A, at a higher
fee/fee-rate than B. Next, Mallory broadcasts B3, double-spending B2 by
spending Mallory's input but not the ephemeral anchor of A. Assuming Mallory
needed to mine B3 anyway, the only cost to this attack is the small chance that
B2 will in fact be mined between the time that B2 is replaced by B3.

At this point A is no longer economical to mine as B has been cycled out, and A
may be dropped from mempools depending on the circumstances.

## SIGHASH_ANYONECANPAY

Obviously, a similar attack is possible against SIGHASH_ANYONECANPAY-using
transactions, provided that _all_ signatures sign with SIGHASH_ANYONECANPAY.

# Countermeasures

As with other replacement cycling attacks, rebroadcasting A and B fixes the
issue. I think the existence of this additional type of replacement cycling
attack suggests that adding an optional rebroadcasting module to Bitcoin Core
that would keep track of dropped transactions and re-add them to mempools when
they are again valid would make sense. This fixes all replacement cycling
attacks and there's probably lots of nodes who have the memory and/or disk
space to keep track of dropped transactions like this.

Preventing the replacement of B2 with B3 is _not_ a viable countermeasure: if
that replacement was prohibited, attackers could in turn exploit that rule as a
new form of transaction pinning!

# Privacy

The fact that rebroadcasting is a countermeasure is a privacy concern. Each
time a transaction is rebroadcast by the sender is a potential opportunity to
track the origin of a transaction. Again, having third parties rebroadcasting
transactions altruistically would mitigate this privacy concern.

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

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