Re: [bitcoin-dev] Improving JoinMarket's resistance to sybil attacks using fidelity bonds

[Dmitry Petukhov <dp@simplexum.com>]

В Mon, 5 Aug 2019 20:04:26 +0100
Chris Belcher <belcher@riseup.net> wrote:

> So what's needed is a way to make renting out TXOs impossible or very
> difficult.

You can make renting the TXOs risky for the attacker. Make it so that
the entity that rented out the TXO can revoke the participation of said
TXO in the market, by publishing some special signature. That act of
revocation can also mean revocation of all other TXOs that were used in
a bond alongside it. This way, any entity that wants to spoil an
attacker's consolidation via rent, can rent out its TXO to the
attacker, and then revoke it, spoiling the whole package the attacker
have consolidated.

There may be other way to impose penalties.

For example, all locked TXO may be required to be spendable by *any*
key that controls any TXO in the 'bond TXO package'. I think this
should be possible with taproot - you will have to publish a taproot
trees for your locked TXOs (say, N of them), and the tree for each TXO
will have N leaves, each leaf will specify a condition "spendable by
the key N". This way, if I give you my TXO to include it in a bond by
locking it, you also need to make your other TXOs in a bond spendable
by me.

For both scenarios to work for the attacker, there's need to be an
off-chain contractual relationship between the parties. Otherwise the
entity that rents out the TXOs can spoil or just confiscate the bond of
the entity that rented them, without reprecussions.