Subject: Re: [bitcoin-dev] OP_Expire and Coinbase-Like Behavior: Making HTLCs Safer by Letting Transactions Expire Safely

From: "David A. Harding" <[email-masked]>
Date: Fri, 20 Oct 2023 22:58:32 -1000

On 2023-10-20 14:09, Peter Todd via bitcoin-dev wrote:
> The basic problem here is after the HTLC-timeout path becomes 
> spendable, the
> HTLC-preimage path remains spendable. That's bad, because in this case 
> we want
> spending the HTLC-preimage - if possible - to have an urgency attached 
> to it to
> ensure that it happens before the previous HTLC-timeout is mined.
> 
> So, why can't we make the HTLC-preimage path expire?

If the goal is to ensure the HTLC-preimage should be mined before an 
upstream HTLC-timeout becomes mineable, then I don't think a consensus 
change is required.  We can just make the HTLC-preimage claimable by 
anyone some time after the HTLC-timeout becomes mineable.

For example, imagine that Alice offers Bob an HTLC with a timeout at 
block t+200.  Bob offers Carol an HTLC with a timeout at block t+100.  
The Bob-Carol HTLC script looks like this:

If
   # Does someone have the preimage?
   Hash <digest> EqualVerify
   If
     # Carol has the preimage at any time
     <Carol key> CheckSig
   Else
     # Anyone else has the preimage after t+150
     <t+150> CLTV
   EndIf
Else
   # Bob is allowed a refund after t+100
   <Bob key> CheckSigVerify
   <t+100> CLTV
EndIf

In English:

- At any time, Carol can spend the output by releasing the preimage
- After t+100, Bob can spend the output
- After t+150, anyone with the preimage can spend the output

Let's consider this in the wider context of the forwarded payment 
Alice->Bob->Carol:

- If Carol attempts to spend the output by releasing the preimage but 
pays too low of a feerate to get it confirmed by block t+100, Bob can 
spend the output in block t+101.  He then has 99 blocks to settle 
(revoke) the Alice-Bob HTLC offchain.

- If Carol releases the preimage to the network in general but prevents 
Bob from using it (e.g. using a replacement cycling attack), anyone who 
saw the preimage can take Carol's output at t+150 and, by doing so, will 
put the preimage in the block chain where Bob will learn about it.  
He'll then have 49 blocks to settle (revoke) the Alice-Bob HTLC 
offchain.

- (All the normal cases when the HTLC is settled offchain, or where 
onchain operations occur in a timely manner)

I think that adequately satisfies the concern about the effect on LN 
from replacement cycling.  Looking at potential complications:

- If all miners acted together[1], they are incentivized to not mine 
Carol's preimage transaction before t+150 because its fees are less than 
the HTLC value they can receive at t+150.  I think this level of miner 
centralization would result in a general failure for LN given that 
miners could be any LN user's counterparty (or bribed by a user's 
counterparty).  E.g., stuff like this: 
https://lists.linuxfoundation.org/pipermail/bitcoin-dev/2020-June/017997.html

- To allow anyone with the preimage to spend the output after t+150, 
they need to know the script.  For taproot, that means the t+150 tapleaf 
script needs to follow a standard (e.g. a BOLT) and that any internal 
merkle nodes needed to connect it to the taproot commitment need to be 
shown in Carol's preimage transaction (or inferable from it or other 
data).

- Classic RBF pinning of the t+150 transaction to prevent it from 
confirming by block t+200 might be an issue.  E.g., including it in a 
400,000 weight low-feerate transaction.

- Full RBF might be required to ensure the t+150 transaction isn't sent 
with a low feerate and no opt-in signal.

Deployment considerations:

- No changes are required to full nodes (no consensus change required)

- No changes are required to mining Bitcoin nodes[2]

- At least one well-connected Bitcoin relay node will need to be updated 
to store preimages and related data, and to send the preimage claim 
transactions.  Data only needs to be kept for a rolling window of a few 
thousand blocks for the LN case, bounding storage requirements.  No 
changes are required to other relaying Bitcoin nodes

- LN nodes will need to update to new HTLC scripts, but this should be 
doable without closing/re-opening channels.  Both anchor and non-anchor 
channels can continue to be used

Compared to OP_EXPIRE:

- OP_EXPIRE requires consensus and policy changes; this does not

- OP_EXPIRE does not depend on special software; this depends on at 
least one person running special software

Although this proposal is an alternative to Peter's proposal and is 
primarily inspired by his idea, it's also a variation on a previous 
suggestion of mine: 
https://lists.linuxfoundation.org/pipermail/lightning-dev/2020-April/002664.html

-Dave

[1] Perhaps under block censorship threat from a mining majority or a 
sub-majority performing selfish mining.

[2] Although miners may want to consider running code that allows them 
to rewrite any malleable transactions to pay themselve