From: Antoine Riard <antoine.riard@gmail•com>
To: Bitcoin Development Mailing List <bitcoindev@googlegroups.com>
Subject: Re: [bitcoindev] Draft BIP for User-Defined Transaction Flags Policy & Strategy
Date: Mon, 15 Apr 2024 19:01:04 -0700 (PDT) [thread overview]
Message-ID: <acf8b209-0c7c-4885-8fcc-8f79c2c4d045n@googlegroups.com> (raw)
In-Reply-To: <CALeFGL3Vu_RLvUjfHUec3M6aYdBND0Nf4=Ddm2zEn=20DtZxqg@mail.gmail.com>
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Hi John,
Few years ago, while discussing mitigations for mempool pinning at the
commitment and second-stage transaction-level, we went to consider
deploying new transaction-relay infrastructure directly connecting
Lightning nodes and miners mempools over LN gossips [0]. This idea was
disregarded, as you're introducing miners / Lightning nodes incentives
misalignment (quid if your LSP who is your channel counterparty drops your
gossip with a HTLC-preimage transaction within). Additionally, mempool
partitioning in the miners mempools can be always tried by your
counterparty with another commitment transaction.
However, one should note that since then privileged transaction-relay API
for Bitcoin applications with time-sensitive traffic requirements have
become more frequent with the "so-branded" transaction accelerators, where
the inclusion of a boosted transaction is only relying on the reputation of
mining pools. With seeing more private / staged transaction-relay API or
protocols, there is indeed a concern of loosing the notion of a common
blockspace market feerate that can be estimated by all full-nodes operators.
On delegating policy-choice to the transaction-issuer themselves, I did
myself an experiment "transaction-issuer selected policy limits" (e.g
selecting the max standard tx weight that is accepted for a transaction
version) [1]. The signaling opt-in mechanism was hacked in the nSequence
field, which I found a bit gross and they are issues with this approach.
Finally, I would observe that still today's mainstream Internet packets
(IPv4 - RFC 794) fields have a defined meaning (e.g type of service with
priorities) even if they're not often respected by ISPs due to local BGP
routing policy. In practice, I think any user-defined transaction flags
proposal like that relies on respecting the finality or dynamic transaction
size limits shall come with a security model relying on miners economic
incentives to have the flag semantics validated.
Best,
Antoine
[0] https://github.com/lightning/bolts/issues/783
[1] https://github.com/bitcoin/bitcoin/issues/29454
Le lundi 15 avril 2024 à 23:00:59 UTC+1, Keagan McClelland a écrit :
> Gaming this out a few iterations, I'm pretty sure a widely deployed DNR
> policy will result in a proliferation of direct-to-miner transaction
> submissions and will result in less network-wide visibility of the
> transaction set that is staged for confirmation. At first it seems
> reasonable to assume that users can help block the propagation of a
> hypothetical DNR replacement, but the miners ultimately are unlikely to
> make this choice in practice. The only argument you can fall back on here
> is that Miners openly defying user desires will ultimately result in
> stagnant or negative BTC growth which is bad for their long term, but I
> think that argument is pretty weak in this context.
>
> Relying on DNR type behavior in applications will definitely be insecure,
> but I think fighting to do it anyway has even more distortion effects that
> we are unlikely to want in the long run.
>
> Keags
>
> On Sun, Apr 14, 2024 at 9:16 AM Bitcoin Error Log <bitcoin...@gmail•com>
> wrote:
>
>> *Posted here:*
>> https://github.com/BitcoinAndLightningLayerSpecs/balls/blob/main/balls-00138.md
>>
>> *Full text here:*
>>
>> BIP: XXXX
>> Title: User-Defined Transaction Flags Policy & Strategy
>> Author: John Carvalho
>> Type: Standards Track
>> Created: Apr 15, 2024
>> Status: Draft
>> Abstract
>>
>> This BIP introduces a utility-optimized strategy for Bitcoin mempool
>> policy with new transaction signaling mechanisms, including Do-Not-Replace
>> (DNR) and Replace-by-Fee (RBF), to enhance control over transaction
>> handling and improve the network's economic efficiency.
>> Motivation
>>
>> Enhancing user autonomy and network efficiency through precise,
>> user-defined transaction signals that integrate seamlessly with Bitcoin's
>> decentralized nature and existing economic models.
>> Specification Transaction Signals
>>
>> -
>>
>> Do-Not-Replace (DNR): Ensures transactions are not replaced once
>> broadcast. This flag is encoded using a specific bit in the transaction’s
>> version field, similar to RBF, but with inverse logic.
>> -
>>
>> Replace-by-Fee (RBF): Allows the sender to signal that the
>> transaction may be replaced by another transaction with a higher fee. This
>> mechanism is used to increase the likelihood of a transaction being picked
>> up by miners in conditions of high network congestion, ensuring timely
>> processing.
>>
>> Encoding
>>
>> The new flag signal, DNR, could be encoded similarly to existing RBF
>> flags, with complementary mempool handling and conflict-resolution logic
>> for default local enforcement.
>>
>>
>> Rationale
>>
>> Addresses the need for predictable transaction handling while respecting
>> the decentralized, incentive-driven nature of network participants.
>>
>> Note: This proposal only discusses subjective, arbitrary mempool policy
>> and handling. It is assumed that any local policy that enforces preferred
>> hardware limits is out of scope and remains separately necessary.
>> Strategic Options for Mempool Evolution
>>
>> There are three strategic options for evolving the Bitcoin mempool
>> management, where only one should be optimized:
>>
>>
>> -
>>
>> User-defined (The ideal, optimistic option): This approach involves
>> creating and default-obeying various transaction flags like RBF and DNR to
>> facilitate specific goals of transactors. The primary tradeoff is that
>> these flags are suggestions and can be overridden by miners, which means
>> they are not enforceable but serve as strong hints to improve transaction
>> predictability and network efficiency.
>> -
>> -
>>
>> Node-defined (The chaotic, centralizing option): This strategy would
>> encourage third-party mempool providers to implement their subjective
>> preferences on transaction facilitation. The significant tradeoff here is
>> the potential fracturing of the mempool and private, mining-pool-centric
>> inclusion requirements, which could lead to increased centralization and
>> censorship.
>> -
>> -
>>
>> Miner-defined (The rational, pessimistic option): The final strategy
>> involves removing all policies and flags, allowing miners to decide based
>> on transaction fees or other out-of-band terms. This approach simplifies
>> the network at the cost of significantly reducing the utility for users who
>> may need special handling for their transactions.
>>
>> Arguments for User-Definition
>>
>> Option 1 is favored here because it provides a balanced approach that
>> enhances user experience and network functionality without overly
>> complicating the Bitcoin protocol or risking centralization. By
>> standardizing flags that indicate user preferences, we can achieve greater
>> harmony and utility within the Bitcoin network, supporting diverse user
>> needs while maintaining decentralization.
>>
>> More importantly, we may be able to prevent mempool fragmentation and
>> privatization to miners and pools for direct transaction inclusion by
>> intentionally supporting flags that better compete and match transaction
>> use cases within the open mempool network instead of censoring them
>> arbitrarily.
>>
>>
>> Economic Implications
>>
>> The introduction of these signals could influence transaction fee markets
>> and network congestion patterns:
>>
>> -
>>
>> DNR potentially improves next-block fee competition and improves
>> network throughput by providing clearer signals about transaction
>> permanence and relevance.
>> -
>>
>> RBF allows for dynamic fee adjustments that can enhance the certainty
>> of transaction confirmations during peak times, benefiting users who need
>> timely processing.
>>
>> Do-Not-Replace (DNR) Use Cases
>>
>> DNR is valuable in scenarios where transaction finality is crucial upon
>> submission, without the risk of later alterations due to increased fees.
>> Here are some specific use cases:
>>
>> -
>>
>> Point-of-Sale Transactions:
>> -
>>
>> Example: Retailers or service providers accepting Bitcoin in a
>> face-to-face setting need transactions to be final immediately to prevent
>> fraud.
>> -
>>
>> Usage: By using the DNR flag, merchants can ensure that once a
>> transaction is broadcast, it cannot be replaced, thereby securing the
>> payment process at the point of sale.
>> -
>>
>> Wage Payments:
>> -
>>
>> Example: Employers paying salaries in Bitcoin require certainty
>> that the transaction amounts cannot be altered once sent.
>> -
>>
>> Usage: DNR provides employers the confidence to execute payroll
>> transactions knowing that the payments cannot be replaced or canceled,
>> ensuring employees receive the exact intended amounts.
>> -
>>
>> Automated Payments for Services:
>> -
>>
>> Example: Subscription services where automated payments are
>> scheduled and should not be subject to change once initiated.
>> -
>>
>> Usage: DNR can be applied to ensure that automated recurring
>> payments are processed without the risk of being replaced, thus simplifying
>> financial planning and contract enforcement.
>>
>> Replace-by-Fee (RBF) Use Cases
>>
>> RBF is essential for transactions where timing and confirmation speed are
>> more critical than the immediacy of finality. Here are applicable scenarios:
>>
>> -
>>
>> High-Frequency Trading:
>> -
>>
>> Example: Traders on cryptocurrency exchanges who need to rapidly
>> adjust their positions based on market conditions.
>> -
>>
>> Usage: RBF allows traders to increase the fee on a transaction if
>> it's not getting confirmed quickly enough, enabling them to ensure timely
>> executions in response to market movements.
>> -
>>
>> Emergency Service Payments:
>> -
>>
>> Example: Payments for time-sensitive services, such as premium
>> fast delivery or emergency technical services.
>> -
>>
>> Usage: When quick service delivery is critical, RBF enables the
>> sender to increase the transaction fee to speed up the confirmation
>> process, ensuring that the transaction is prioritized by miners.
>> -
>>
>> Bidding in Auctions:
>> -
>>
>> Example: Participants in online auctions who need to ensure their
>> payments go through before the auction closes.
>> -
>>
>> Usage: Auction participants can use RBF to adjust their
>> transaction fees to outpace other transactions in times of network
>> congestion, securing their winning bids.
>> -
>>
>> Dynamic Fee Management for Wallets:
>> -
>>
>> Example: Users sending non-urgent transactions who want to
>> minimize fees but are willing to increase them if network conditions change.
>> -
>>
>> Usage: RBF provides flexibility, allowing users to start with a
>> lower fee and only increase it if the transaction confirmation is delayed,
>> optimizing their transaction fee expenditures.
>>
>> Adoption and Transition Strategy & Requirements
>>
>> It is implicit, until now, that within this strategy is a requirement for
>> Core and other implementations to abandon strategies within Option 2, by
>> specifically removing and rejecting policy tools like mempoolfullrbf, or
>> other attempts to overrule, filter, or otherwise filter and hamper the
>> propagation of valid, non-destructive transactions.
>>
>> This proposal is presented to the community for feedback, focusing on
>> gathering input from wallet developers, miners, and node operators to
>> ensure broad support and understanding of the benefits and implications of
>> these new transaction signals.
>>
>> --
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>>
>
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prev parent reply other threads:[~2024-04-16 13:16 UTC|newest]
Thread overview: 5+ messages / expand[flat|nested] mbox.gz Atom feed top
2024-04-14 15:09 Bitcoin Error Log
2024-04-14 15:51 ` Peter Todd
2024-04-14 20:12 ` Isaac Eiter
2024-04-15 18:58 ` Keagan McClelland
2024-04-16 2:01 ` Antoine Riard [this message]
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