[bitcoin-dev] Unenforceable fee obligations in multiparty protocols with Taproot inputs

From: Yuval Kogman <nothingmuch@woobling•org>
To: Bitcoin Protocol Discussion <bitcoin-dev@lists•linuxfoundation.org>
Subject: [bitcoin-dev] Unenforceable fee obligations in multiparty protocols with Taproot inputs
Date: Tue, 7 Feb 2023 04:49:28 +0200	[thread overview]
Message-ID: <CAAQdECCH=YOcu4g6Ku1_G4CnRg6rsaFPFPwbABx9aZin9A8+2A@mail.gmail.com> (raw)

## Summary

Since Taproot (more generally any kind of MAST) spends have variable size which
depends on the path being used, the last such input to be signed in a multiparty
transaction can always use a larger than estimated signature to unfairly extract
a fee contribution from the other parties to the transaction (keeping the
absolute fees the same and reducing the feerate for the transaction).

## Attack Scenario

Alice et al wish to perform a multiparty transaction, such as a CoinJoin or
lightning dual funding at a relatively high feerate.

Mallory has a P2TR output with a large script spend path, e.g. an ordinal
inscription commitment transaction output.

Mallory registers this coin as an input into the multiparty transaction with a
fee obligation calculated on the basis of a key spend. When all other
participants have provided signatures, the script spend path can be used.

Since the absolute fee amount is already committed to by the provided
(`SIGHASH_ALL`) signatures but the total transaction weight is not, Mallory can
broadcast any valid signatures up to the maximum standard weight and minimum
relay fees, or in collusion with a miner, up to consensus limits.

This effectively steals a fee from Alice et al, as their signatures do not
commit to a feerate directly or indirectly.

## Mitigations

### RBF

All parties could negotiate a (series of) transaction(s) ahead of time at a
lower feerate, giving a lower bound minimum feerate that Mallory can force.

### Minimum Weight Before Signing

Enforcing a minimal weight for all non-witness data in the transaction before
the transaction is considered fully constructed can limit the effectiveness of
this attack, since the difference between the predicted weight and the maximum
weight decreases.

### Trusted Coordinator

In the centralized setting if BIP-322 ownership proofs are required for
participation and assuming the server can be trusted not to collude with
Mallory, the server can reject signatures that do not exercise the same spend
path as the ownership proof, which makes the ownership proof a commitment to the
spend weight of the input.

### Reputation

Multiparty protocols with publicly verifiable protocol transcripts can be
provided as weak evidence of a history of honest participation in multiparty
transactions.

A ring signature from keys used in the transaction or its transcript committing
to the new proposed transaction can provide weak evidence for the honesty of the
peer.

Such proofs are more compelling to an entity which has participated in (one of)
the transcripts, or proximal transactions. Incentives are theoretically aligned
if public coordinators publish these transcripts as a kind of server reputation.

### Increasing Costliness

A minimum feerate for the previous transaction or a minimum confirmation age
(coindays destroyed implies time value, analogous to fidelity bonds) can be
required for inputs to be added, in order to make such attacks less lucrative
(but there is still a positive payoff for the attacker).

### Signature Ordering

Signatures from potentially exploitative inputs can be required ahead of legacy
or SegWit v0 ones. The prescribed order can be determined based on reputation or
costliness as described in the previous paragraphs.