Re: [bitcoin-dev] RBF Pinning with Counterparties and Competing Interest

Re: [bitcoin-dev] RBF Pinning with Counterparties and Competing Interest

[Matt Corallo]

Hmm, that's an interesting suggestion, it definitely raises the bar for attack execution rather significantly. Because lightning (and other second-layer systems) already relies heavily on uncensored access to blockchain data, its reasonable to extend the "if you don't have enough blocks, aggressively query various sources to find new blocks, or, really just do it always" solution to "also send relevant transactions while we're at it".

Sadly, unlike for block data, there is no consensus mechanism for nodes to ensure the transactions in their mempools are the same as others. Thus, if you focus on sending the pinning transaction to miner nodes directly (which isn't trivial, but also not nearly as hard as it sounds), you could still pull off the attack. However, to do it now, you'd need to
wait for your counterparty to broadcast the corresponding timeout transaction (once it is confirmable, and can thus get into mempools), turning the whole thing into a mempool-acceptance race. Luckily there isn’t much cost to *trying*, though it’s less likely you’ll succeed.

There are also practical design issues - if you’re claiming multiple HTLC output in a single transaction the node would need to provide reject messages for each input which is conflicted, something which we’d need to think hard about the DoS implications of.

In any case, while it’s definitely better than nothing, it’s unclear if it’s really the kind of thing I’d want to rely on for my own funds.

Matt


> On 4/22/20 2:24 PM, David A. Harding wrote:
>> On Mon, Apr 20, 2020 at 10:43:14PM -0400, Matt Corallo via Lightning-dev wrote:
>> A lightning counterparty (C, who received the HTLC from B, who
>> received it from A) today could, if B broadcasts the commitment
>> transaction, spend an HTLC using the preimage with a low-fee,
>> RBF-disabled transaction.  After a few blocks, A could claim the HTLC
>> from B via the timeout mechanism, and then after a few days, C could
>> get the HTLC-claiming transaction mined via some out-of-band agreement
>> with a small miner. This leaves B short the HTLC value.
> 
> IIUC, the main problem is honest Bob will broadcast a transaction
> without realizing it conflicts with a pinned transaction that's already
> in most node's mempools.  If Bob knew about the pinned transaction and
> could get a copy of it, he'd be fine.
> 
> In that case, would it be worth re-implementing something like a BIP61
> reject message but with an extension that returns the txids of any
> conflicts?  For example, when Bob connects to a bunch of Bitcoin nodes
> and sends his conflicting transaction, the nodes would reply with
> something like "rejected: code 123: conflicts with txid 0123...cdef".
> Bob could then reply with a a getdata('tx', '0123...cdef') to get the
> pinned transaction, parse out its preimage, and resolve the HTLC.
> 
> This approach isn't perfect (if it even makes sense at all---I could be
> misunderstanding the problem) because one of the problems that caused
> BIP61 to be disabled in Bitcoin Core was its unreliability, but I think
> if Bob had at least one honest peer that had the pinned transaction in
> its mempool and which implemented reject-with-conflicting-txid, Bob
> might be ok.
> 
> -Dave

Re: [bitcoin-dev] RBF Pinning with Counterparties and Competing Interest

[David A. Harding]

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On Wed, Apr 22, 2020 at 03:53:37PM -0700, Matt Corallo wrote:
> if you focus on sending the pinning transaction to miner nodes
> directly (which isn't trivial, but also not nearly as hard as it
> sounds), you could still pull off the attack. 

If the problem is that miners might have information not available to
the network in general, you could just bribe them for that knowledge.
E.g. as Bob's refund deadline approaches and he begins to suspect that
mempool shenanigans are preventing his refund transaction from
confirming, he takes a confirmed P2WPKH UTXO he's been saving for use in
CPFP fee bumps and spends part of its value (say 1 mBTC) to the
following scriptPubKey[1],

    OP_SHA256 <hash_whose_preimage_bob_wants> OP_EQUAL

Assuming the feerate and the bribe amount are reasonable, any miner who
knows the preimage is incentivized to include Bob's transaction and a
child transation spending from it in their next block.  That child
transaction will include the preimage, which Bob will see when he
processes the block.

If any non-miner knows the preimage, they can also create that child
transaction.  The non-miner probably can't profit from this---miners can
just rewrite the child transaction to pay themselves since there's no
key-based security---but the non-miner can at least pat themselves on
the back for being a good Summaritan.  Again Bob will learn the preimage
once the child transaction is included in a block, or earlier if his
wallet is monitoring for relays of spends from his parent transaction.

Moreover, Bob can first create a bribe via LN and, in that case, things
are even better.  As Bob's deadline approaches, he uses one of his
still-working channels to send a bunch of max-length (20 hops?) probes
that reuse the earlier HTLC's <hash>.  If any hop along the path knows
the preimage, they can immediately claim the probe amount (and any
routing fees that were allocated to subsequent hops).  This not only
gives smaller miners with LN nodes an equal chance of claiming the
probe-bribe as larger miners, but it also allows non-miners to profit
from learning the preimage from miners.

That last part is useful because even if, as in your example, the
adversary is able to send one version of the transaction just to miners
(with the preimage) and another conflicting version to all relay nodes
(without the preimage), miners will naturally attempt to relay the
preimage version of the transaction to other users; if some of those
users run modified nodes that write all 32-byte witness data blobs to a
database---even if the transaction is ultimately rejected as a
conflict---then targetted relay to miners may not be effective at
preventing Bob from learning the preimage.

Obviously all of the above requires people run additional software to
keep track of potential preimages[2] and then compare them to hash
candidates, plus it requires additional complexity in LN clients, so I
can easily understand why it might be less desirable than the protocol
changes under discussion in other parts of this thread.  Still, with
lots of effort already being put into watchtowers and other
enforcement-assistance services, I wonder if this problem can be largely
addressed in the same general way.

-Dave

[1] Requires a change to standard relay and mining policy.
[2] Pretty easy, e.g.

    bitcoin-cli getrawmempool \
    | jq -r .[] \
    | while read txid ; do
      bitcoin-cli getrawtransaction $txid true | jq .vout[].scriptPubKey.asm
    done \
    | grep -o '\<[0-9a-f]\{64\}\>'

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Re: [bitcoin-dev] [Lightning-dev] RBF Pinning with Counterparties and Competing Interest

[ZmnSCPxj]

Good morning David,

Unfortunately this technique does not look like it is compatible to payment points rather than hashes, and we would really like to upgrade to payment points sooner rather than later.
Nobody but B can recognize the signature as revealing the scalar behind a particular point (the main privacy advantage of using points).
Even variations on this are not useable with payment points.

Regards,
ZmnSCPxj

> On Wed, Apr 22, 2020 at 03:53:37PM -0700, Matt Corallo wrote:
>
> > if you focus on sending the pinning transaction to miner nodes
> > directly (which isn't trivial, but also not nearly as hard as it
> > sounds), you could still pull off the attack.
>
> If the problem is that miners might have information not available to
> the network in general, you could just bribe them for that knowledge.
> E.g. as Bob's refund deadline approaches and he begins to suspect that
> mempool shenanigans are preventing his refund transaction from
> confirming, he takes a confirmed P2WPKH UTXO he's been saving for use in
> CPFP fee bumps and spends part of its value (say 1 mBTC) to the
> following scriptPubKey[1],
>
> OP_SHA256 <hash_whose_preimage_bob_wants> OP_EQUAL
>
> Assuming the feerate and the bribe amount are reasonable, any miner who
> knows the preimage is incentivized to include Bob's transaction and a
> child transation spending from it in their next block. That child
> transaction will include the preimage, which Bob will see when he
> processes the block.
>
> If any non-miner knows the preimage, they can also create that child
> transaction. The non-miner probably can't profit from this---miners can
> just rewrite the child transaction to pay themselves since there's no
> key-based security---but the non-miner can at least pat themselves on
> the back for being a good Summaritan. Again Bob will learn the preimage
> once the child transaction is included in a block, or earlier if his
> wallet is monitoring for relays of spends from his parent transaction.
>
> Moreover, Bob can first create a bribe via LN and, in that case, things
> are even better. As Bob's deadline approaches, he uses one of his
> still-working channels to send a bunch of max-length (20 hops?) probes
> that reuse the earlier HTLC's <hash>. If any hop along the path knows
> the preimage, they can immediately claim the probe amount (and any
> routing fees that were allocated to subsequent hops). This not only
> gives smaller miners with LN nodes an equal chance of claiming the
> probe-bribe as larger miners, but it also allows non-miners to profit
> from learning the preimage from miners.
>
> That last part is useful because even if, as in your example, the
> adversary is able to send one version of the transaction just to miners
> (with the preimage) and another conflicting version to all relay nodes
> (without the preimage), miners will naturally attempt to relay the
> preimage version of the transaction to other users; if some of those
> users run modified nodes that write all 32-byte witness data blobs to a
> database---even if the transaction is ultimately rejected as a
> conflict---then targetted relay to miners may not be effective at
> preventing Bob from learning the preimage.
>
> Obviously all of the above requires people run additional software to
> keep track of potential preimages[2] and then compare them to hash
> candidates, plus it requires additional complexity in LN clients, so I
> can easily understand why it might be less desirable than the protocol
> changes under discussion in other parts of this thread. Still, with
> lots of effort already being put into watchtowers and other
> enforcement-assistance services, I wonder if this problem can be largely
> addressed in the same general way.
>
> -Dave
>
> [1] Requires a change to standard relay and mining policy.
> [2] Pretty easy, e.g.
>
> bitcoin-cli getrawmempool \
> | jq -r .[] \
> | while read txid ; do
> bitcoin-cli getrawtransaction $txid true | jq .vout[].scriptPubKey.asm
> done \
> | grep -o '\<[0-9a-f]\{64\}\>'
>
> Lightning-dev mailing list
> Lightning-dev@lists.linuxfoundation.org
> https://lists.linuxfoundation.org/mailman/listinfo/lightning-dev

Re: [bitcoin-dev] RBF Pinning with Counterparties and Competing Interest

[Rusty Russell]

"David A. Harding via bitcoin-dev" <bitcoin-dev@lists.linuxfoundation.org> writes:
> To avoid the excessive wasting of bandwidth.  Bitcoin Core's defaults
> require each replacement pay a feerate of 10 nBTC/vbyte over an existing
> transaction or package, and the defaults also allow transactions or
> packages up to 100,000 vbytes in size (~400,000 bytes).  So, without
> enforcement of BIP125 rule 3, an attacker starting at the minimum
> default relay fee also of 10 nBTC/vbyte could do the following:
>
> - Create a ~400,000 bytes tx with feerate of 10 nBTC/vbyte (1 mBTC total
>   fee)
>
> - Replace that transaction with 400,000 new bytes at a feerate of 20
>   nBTC/vbyte (2 mBTC total fee)
>
> - Perform 998 additional replacements, each increasing the feerate by 10
>   nBTC/vbyte and the total fee by 1 mBTC, using a total of 400 megabytes
>   (including the original transaction and first replacement) to
>   ultimately produce a transaction with a feerate of 10,000 nBTC/vbyte
>   (1 BTC total fee)
>
> - Perform one final replacement of the latest 400,000 byte transaction
>   with a ~200-byte (~150 vbyte) 1-in, 1-out P2WPKH transaction that pays
>   a feerate of 10,010 nBTC/vbyte (1.5 mBTC total fee)

To be fair, if the feerate you want is 100x the minimum permitted, you
can always use 100x as much bandwidth as necessary without extra cost.
If everyone (or some major tx producers) were to do that, it would suck.

To fix this properly, you really need to agressively delay processing
(thus propagation) of transactions which aren't likely to be in the next
(few?) blocks.  This is a more miner incentive compatible scheme.

However, I realize this is a complete rewrite of bitcoind's logic, and
I'm not volunteering to do it!

Cheers,
Rusty,

Re: [bitcoin-dev] RBF Pinning with Counterparties and Competing Interest

[Jeremy]

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Hi everyone,

Sorry to just be getting to a response here. Hadn't noticed it till now.

*(Plug: If anyone or their organizations would like to assist in funding
the work described below for a group of developers, I've been working to
put resources together for funding the above for a few months now, and I
think it would be high leverage towards seeing this through. There are a
lot of unsexy tasks to do  that aren't coming up with a solution
(e.g.,writing a myriad of Mempool stress test scenarios) that can be a well
defined full-time job for someone to do.)*

I've been working on exactly this problem in the mempool for months now.
I'm deeply familiar with the issues here and the types of pinning possible.
I think everyone can recognize that with my work on OP_CTV I want nothing
more than the mempool to be able to accept whatever long chains we can
throw at it, but I'm pretty well steeped at this point in the obstacles to
doing that.

I don't think that we should be entertaining further carve outs at the
moment, unless it is really trivial. Every new carve out rule added to the
way that the mempool operates is removing complexity invariants we aim to
preserve in the mempool in order to keep nodes operational. Many of these
invariants are well documented, some are not. I'm happy to go off list for
a more thorough discussion with anyone qualified to have it; this isn't the
best venue for that discussion.

From my point of view the path forward here is to dedicate more development
resources towards finishing the mempool project I began. You can see the
outstanding work here: https://github.com/bitcoin/bitcoin/projects/14,
contributing review towards moving those PRs forward will greatly improve
our ability to consider a stopgap carve out measure.

The current focus of this work is primarily on:

1) Testing Construction to better test & catch regressions or
vulnerabilities introduced or extant in mempool
2) Refactoring algorithms in mempool to reduce constant factors &
asymptotics
3) Package Relay


None of these fix the exact problem at hand though, but here's part of how
they can help us:

If we finish up the algorithmic refactors I've been working on it seems
plausible to do a one-off increase of descendants limits to say, 100
descendants with no restriction. However, we could use the opportunity to
use the 75 descendant increase exclusively for a new carve out, and apply
some new stricter rules in that extra space. There are a few anti-pinning
countermeasures that you can apply in that space that you would not
generally want in the mempool. An example of one is that any new
transaction must pay more feerate and absolute fee than every child in that
space. Or that only the highest fee paying branch of the excess
transactions are mineable, no others. Another would be disabling RBF past
that watermark. In all likelihood, different subsystems interacting with
the mempool will require a different set of restrictions each with the
current architecture, I don't think there's a magic bullet.

Package relay is a promising approach for a future pinning solution as
there are opportunities to attach to packages compact proofs of improved
fee efficiency for pinned transactions. But the ground work for package
relay needs to come first. This is theoretically possible with our current
architecture of the mempool and can probably address much of the pinning
concerns by replacing pinning with more rational eviction policies.

Longer term I've been working on plans and designs to completely re-do the
mempool's architecture to make it behave for arbitrary cases. It's possible
to one day lift all preemptively enforced (e.g., before acceptance)
descendants limits, which can solve this problem for good. There is more
than one potentially good solution here, and a conjunction of them can be
used as they affect independent sub systems. But this work will probably
take years to complete to the point where restrictions can realistically be
lifted.

If developers would like to coordinate resources around completing this
work and making more regular progress on it I'm happy to help point people
to specific tasks that need to be done in order to accelerate this and help
serialize the work so that we can not get into rebase hell.

Originally I had the plug at the top as a closing note, but I figured
people might miss it.

Best,

Jeremy


--
@JeremyRubin <https://twitter.com/JeremyRubin>

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Re: [bitcoin-dev] RBF Pinning with Counterparties and Competing Interest

[Matt Corallo]

On 4/22/20 7:27 PM, Olaoluwa Osuntokun wrote:
> 
>> Indeed, that is what I’m suggesting
> 
> Gotcha, if this is indeed what you're suggesting (all HTLC spends are now
> 2-of-2 multi-sig), then I think the modifications to the state machine I
> sketched out in an earlier email are required. An exact construction which
> achieves the requirements of "you can't broadcast until you have a secret
> which I can obtain from the htlc sig for your commitment transaction, and my
> secret is revealed with another swap", appears to be an open problem, atm.

Hmm, indeed, it does seem to require a change to the state machine, but I don't think a very interesting one. Because B
providing A an HTLC signature spending a commitment transaction B will broadcast does not allow A to actually broadcast
said HTLC transaction, B can be rather liberal with it. Indeed, however, it would require that B provide such a
signature before A can send the commitment_signed that exists today.

> Even if they're restricted in this fashion (must be a 1-in-1 out,
> sighashall, fees are pre agreed upon), they can still spend that with a CPFP
> (while still unconfirmed in the mempool) and create another heavy tree,
> which puts us right back at the same bidding war scenario?

Right, you'd have to use anchor outputs just like we do on the commitment transaction :).

>> There are a bunch of ways of doing pinning - just opting into RBF isn’t
>> even close to enough.
> 
> Mhmm, there're other ways of doing pinning. But with anchors as is defined
> in that spec PR, they're forced to spend with an RBF-replaceable
> transaction, which means the party wishing to time things out can enter into
> a bidding war. If the party trying to impeded things participates in this
> progressive absolute fee increase, it's likely that the war terminates
> with _one_ of them getting into the block, which seems to resolve
> everything?

No? Even if we assume there are no tricks that you can play with, eg, the package limits duri eviction, which I'd be
surprised about, the "absolute fee/feerate" thing still screws you. The attacker here gets to hold something at the
bottom of the mempool and the poor honest party is going to have to pay an absurd (likely more than the HTLC value) fee
just to get it unstuck, whereas the attacker never would have had to pay said fee.

> -- Laolung
> 
> 
> On Wed, Apr 22, 2020 at 4:20 PM Matt Corallo <lf-lists@mattcorallo.com <mailto:lf-lists@mattcorallo.com>> wrote:
> 
> 
> 
>>     On Apr 22, 2020, at 16:13, Olaoluwa Osuntokun <laolu32@gmail.com <mailto:laolu32@gmail.com>> wrote:
>>
>>     > Hmm, maybe the proposal wasn't clear. The idea isn't to add signatures to
>>     > braodcasted transactions, but instead to CPFP a maybe-broadcasted
>>     > transaction by sending a transaction which spends it and seeing if it is
>>     > accepted
>>
>>     Sorry I still don't follow. By "we clearly need to go the other direction -
>>     all HTLC output spends need to be pre-signed.", you don't mean that the HTLC
>>     spends of the non-broadcaster also need to be an off-chain 2-of-2 multi-sig
>>     covenant? If the other party isn't restricted w.r.t _how_ they can spend the
>>     output (non-rbf'd, ect), then I don't see how that addresses anything.
> 
>     Indeed, that is what I’m suggesting. Anchor output and all. One thing we could think about is only turning it on
>     over a certain threshold, and having a separate “only-kinda-enforceable-on-chain-HTLC-in-flight” limit.
> 
>>     Also see my mail elsewhere in the thread that the other party is actually
>>     forced to spend their HTLC output using an RBF-replaceable transaction. With
>>     that, I think we're all good here? In the end both sides have the ability to
>>     raise the fee rate of their spending transactions with the highest winning.
>>     As long as one of them confirms within the CLTV-delta, then everyone is
>>     made whole.
> 
>     It does seem like my cached recollection of RBF opt-in was incorrect but please re-read the intro email. There are a
>     bunch of ways of doing pinning - just opting into RBF isn’t even close to enough.
> 
>>     [1]: https://github.com/bitcoin/bitcoin/pull/18191
>>
>>
>>     On Wed, Apr 22, 2020 at 9:50 AM Matt Corallo <lf-lists@mattcorallo.com <mailto:lf-lists@mattcorallo.com>> wrote:
>>
>>         A few replies inline.
>>
>>         On 4/22/20 12:13 AM, Olaoluwa Osuntokun wrote:
>>         > Hi Matt,
>>         >
>>         >
>>         >> While this is somewhat unintuitive, there are any number of good anti-DoS
>>         >> reasons for this, eg:
>>         >
>>         > None of these really strikes me as "good" reasons for this limitation, which
>>         > is at the root of this issue, and will also plague any more complex Bitcoin
>>         > contracts which rely on nested trees of transaction to confirm (CTV, Duplex,
>>         > channel factories, etc). Regarding the various (seemingly arbitrary) package
>>         > limits it's likely the case that any issues w.r.t computational complexity
>>         > that may arise when trying to calculate evictions can be ameliorated with
>>         > better choice of internal data structures.
>>         >
>>         > In the end, the simplest heuristic (accept the higher fee rate package) side
>>         > steps all these issues and is also the most economically rationale from a
>>         > miner's perspective. Why would one prefer a higher absolute fee package
>>         > (which could be very large) over another package with a higher total _fee
>>         > rate_?
>>
>>         This seems like a somewhat unnecessary drive-by insult of a project you don't contribute to, but feel free to
>>         start with
>>         a concrete suggestion here :).
>>
>>         >> You'll note that B would be just fine if they had a way to safely monitor the
>>         >> global mempool, and while this seems like a prudent mitigation for
>>         >> lightning implementations to deploy today, it is itself a quagmire of
>>         >> complexity
>>         >
>>         > Is it really all that complex? Assuming we're talking about just watching
>>         > for a certain script template (the HTLC scipt) in the mempool to be able to
>>         > pull a pre-image as soon as possible. Early versions of lnd used the mempool
>>         > for commitment broadcast detection (which turned out to be a bad idea so we
>>         > removed it), but at a glance I don't see why watching the mempool is so
>>         > complex.
>>
>>         Because watching your own mempool is not guaranteed to work, and during upgrade cycles that include changes to the
>>         policy rules an attacker could exploit your upgraded/non-upgraded status to perform the same attack.
>>
>>         >> Further, this is a really obnoxious assumption to hoist onto lightning
>>         >> nodes - having an active full node with an in-sync mempool is a lot more
>>         >> CPU, bandwidth, and complexity than most lightning users were expecting to
>>         >> face.
>>         >
>>         > This would only be a requirement for Lightning nodes that seek to be a part
>>         > of the public routing network with a desire to _forward_ HTLCs. This isn't
>>         > doesn't affect laptops or mobile phones which likely mostly have private
>>         > channels and don't participate in HTLC forwarding. I think it's pretty
>>         > reasonable to expect a "proper" routing node on the network to be backed by
>>         > a full-node. The bandwidth concern is valid, but we'd need concrete numbers
>>         > that compare the bandwidth over head of mempool awareness (assuming the
>>         > latest and greatest mempool syncing) compared with the overhead of the
>>         > channel update gossip and gossip queries over head which LN nodes face today
>>         > as is to see how much worse off they really would be.
>>
>>         If mempool-watching were practical, maybe, though there are a number of folks who are talking about designing
>>         partially-offline local lightning hubs which would be rendered impractical.
>>
>>         > As detailed a bit below, if nodes watch the mempool, then this class of
>>         > attack assuming the anchor output format as described in the open
>>         > lightning-rfc PR is mitigated. At a glance, watching the mempool seems like
>>         > a far less involved process compared to modifying the state machine as its
>>         > defined today. By watching the mempool and implementing the changes in
>>         > #lightning-rfc/688, then this issue can be mitigated _today_. lnd 0.10
>>         > doesn't yet watch the mempool (but does include anchors [1]), but unless I'm
>>         > missing something it should be pretty straight forward to add which mor or less
>>         > resolves this issue all together.
>>         >
>>         >> not fixing this issue seems to render the whole exercise somewhat useless
>>         >
>>         > Depends on if one considers watching the mempool a fix. But even with that a
>>         > base version of anchors still resolves a number of issues including:
>>         > eliminating the commitment fee guessing game, allowing users to pay less on
>>         > force close, being able to coalesce 2nd level HTLC transactions with the
>>         > same CLTV expiry, and actually being able to reliably enforce multi-hop HTLC
>>         > resolution.
>>         >
>>         >> Instead of making the HTLC output spending more free-form with
>>         >> SIGHASH_ANYONECAN_PAY|SIGHASH_SINGLE, we clearly need to go the other
>>         >> direction - all HTLC output spends need to be pre-signed.
>>         >
>>         > I'm not sure this is actually immediately workable (need to think about it
>>         > more). To see why, remember that the commit_sig message includes HTLC
>>         > signatures for the _remote_ party's commitment transaction, so they can
>>         > spend the HTLCs if they broadcast their version of the commitment (force
>>         > close). If we don't somehow also _gain_ signatures (our new HTLC signatures)
>>         > allowing us to spend HTLCs on _their_ version of the commitment, then if
>>         > they broadcast that commitment (without revoking), then we're unable to
>>         > redeem any of those HTLCs at all, possibly losing money.
>>
>>         Hmm, maybe the proposal wasn't clear. The idea isn't to add signatures to braodcasted transactions, but
>>         instead to CPFP
>>         a maybe-broadcasted transaction by sending a transaction which spends it and seeing if it is accepted. You
>>         only need to
>>         know the transaction's exact format (ie txid, which we do, since we sent a signature for it long ago) to do
>>         this, you
>>         don't have to actually *have* the fully-signed transaction (and you don't).
>>
>>         > In an attempt to counteract this, we might say ok, the revoke message also
>>         > now includes HTLC signatures for their new commitment allowing us to spend
>>         > our HTLCs. This resolves things in a weaker security model, but doesn't
>>         > address the issue generally, as after they receive the commit_sig, they can
>>         > broadcast immediately, again leaving us without a way to redeem our HTLCs.
>>         >
>>         > I'd need to think about it more, but it seems that following this path would
>>         > require an overhaul in the channel state machine to make presenting a new
>>         > commitment actually take at least _two phases_ (at least a full round trip).
>>         > The first phase would tender the commitment, but render them unable to
>>         > broadcast it. The second phase would then <insert something something
>>         > scriptless scripts here> enter a new sub-protocol which upon conclusion,
>>         > gives the commitment proposer valid HTLC signatures, and gives the responder
>>         > what they need to be able to broadcast their commitment and claim their
>>         > HTCLs in an atomic manner.
>>         >
>>         > -- Laolu
>>         >
>>         > [1]: https://github.com/lightningnetwork/lnd/pull/3821
>>

Re: [bitcoin-dev] RBF Pinning with Counterparties and Competing Interest

[Olaoluwa Osuntokun]

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> Indeed, that is what I’m suggesting

Gotcha, if this is indeed what you're suggesting (all HTLC spends are now
2-of-2 multi-sig), then I think the modifications to the state machine I
sketched out in an earlier email are required. An exact construction which
achieves the requirements of "you can't broadcast until you have a secret
which I can obtain from the htlc sig for your commitment transaction, and my
secret is revealed with another swap", appears to be an open problem, atm.

Even if they're restricted in this fashion (must be a 1-in-1 out,
sighashall, fees are pre agreed upon), they can still spend that with a CPFP
(while still unconfirmed in the mempool) and create another heavy tree,
which puts us right back at the same bidding war scenario?

> There are a bunch of ways of doing pinning - just opting into RBF isn’t
> even close to enough.

Mhmm, there're other ways of doing pinning. But with anchors as is defined
in that spec PR, they're forced to spend with an RBF-replaceable
transaction, which means the party wishing to time things out can enter into
a bidding war. If the party trying to impeded things participates in this
progressive absolute fee increase, it's likely that the war terminates
with _one_ of them getting into the block, which seems to resolve
everything?

-- Laolu


On Wed, Apr 22, 2020 at 4:20 PM Matt Corallo <lf-lists@mattcorallo.com>
wrote:

>
>
> On Apr 22, 2020, at 16:13, Olaoluwa Osuntokun <laolu32@gmail.com> wrote:
>
>
> > Hmm, maybe the proposal wasn't clear. The idea isn't to add signatures to
> > braodcasted transactions, but instead to CPFP a maybe-broadcasted
> > transaction by sending a transaction which spends it and seeing if it is
> > accepted
>
> Sorry I still don't follow. By "we clearly need to go the other direction -
> all HTLC output spends need to be pre-signed.", you don't mean that the
> HTLC
> spends of the non-broadcaster also need to be an off-chain 2-of-2 multi-sig
> covenant? If the other party isn't restricted w.r.t _how_ they can spend
> the
> output (non-rbf'd, ect), then I don't see how that addresses anything.
>
>
> Indeed, that is what I’m suggesting. Anchor output and all. One thing we
> could think about is only turning it on over a certain threshold, and
> having a separate “only-kinda-enforceable-on-chain-HTLC-in-flight” limit.
>
> Also see my mail elsewhere in the thread that the other party is actually
> forced to spend their HTLC output using an RBF-replaceable transaction.
> With
> that, I think we're all good here? In the end both sides have the ability
> to
> raise the fee rate of their spending transactions with the highest winning.
> As long as one of them confirms within the CLTV-delta, then everyone is
> made whole.
>
>
> It does seem like my cached recollection of RBF opt-in was incorrect but
> please re-read the intro email. There are a bunch of ways of doing pinning
> - just opting into RBF isn’t even close to enough.
>
> [1]: https://github.com/bitcoin/bitcoin/pull/18191
>
>
> On Wed, Apr 22, 2020 at 9:50 AM Matt Corallo <lf-lists@mattcorallo.com>
> wrote:
>
>> A few replies inline.
>>
>> On 4/22/20 12:13 AM, Olaoluwa Osuntokun wrote:
>> > Hi Matt,
>> >
>> >
>> >> While this is somewhat unintuitive, there are any number of good
>> anti-DoS
>> >> reasons for this, eg:
>> >
>> > None of these really strikes me as "good" reasons for this limitation,
>> which
>> > is at the root of this issue, and will also plague any more complex
>> Bitcoin
>> > contracts which rely on nested trees of transaction to confirm (CTV,
>> Duplex,
>> > channel factories, etc). Regarding the various (seemingly arbitrary)
>> package
>> > limits it's likely the case that any issues w.r.t computational
>> complexity
>> > that may arise when trying to calculate evictions can be ameliorated
>> with
>> > better choice of internal data structures.
>> >
>> > In the end, the simplest heuristic (accept the higher fee rate package)
>> side
>> > steps all these issues and is also the most economically rationale from
>> a
>> > miner's perspective. Why would one prefer a higher absolute fee package
>> > (which could be very large) over another package with a higher total
>> _fee
>> > rate_?
>>
>> This seems like a somewhat unnecessary drive-by insult of a project you
>> don't contribute to, but feel free to start with
>> a concrete suggestion here :).
>>
>> >> You'll note that B would be just fine if they had a way to safely
>> monitor the
>> >> global mempool, and while this seems like a prudent mitigation for
>> >> lightning implementations to deploy today, it is itself a quagmire of
>> >> complexity
>> >
>> > Is it really all that complex? Assuming we're talking about just
>> watching
>> > for a certain script template (the HTLC scipt) in the mempool to be
>> able to
>> > pull a pre-image as soon as possible. Early versions of lnd used the
>> mempool
>> > for commitment broadcast detection (which turned out to be a bad idea
>> so we
>> > removed it), but at a glance I don't see why watching the mempool is so
>> > complex.
>>
>> Because watching your own mempool is not guaranteed to work, and during
>> upgrade cycles that include changes to the
>> policy rules an attacker could exploit your upgraded/non-upgraded status
>> to perform the same attack.
>>
>> >> Further, this is a really obnoxious assumption to hoist onto lightning
>> >> nodes - having an active full node with an in-sync mempool is a lot
>> more
>> >> CPU, bandwidth, and complexity than most lightning users were
>> expecting to
>> >> face.
>> >
>> > This would only be a requirement for Lightning nodes that seek to be a
>> part
>> > of the public routing network with a desire to _forward_ HTLCs. This
>> isn't
>> > doesn't affect laptops or mobile phones which likely mostly have private
>> > channels and don't participate in HTLC forwarding. I think it's pretty
>> > reasonable to expect a "proper" routing node on the network to be
>> backed by
>> > a full-node. The bandwidth concern is valid, but we'd need concrete
>> numbers
>> > that compare the bandwidth over head of mempool awareness (assuming the
>> > latest and greatest mempool syncing) compared with the overhead of the
>> > channel update gossip and gossip queries over head which LN nodes face
>> today
>> > as is to see how much worse off they really would be.
>>
>> If mempool-watching were practical, maybe, though there are a number of
>> folks who are talking about designing
>> partially-offline local lightning hubs which would be rendered
>> impractical.
>>
>> > As detailed a bit below, if nodes watch the mempool, then this class of
>> > attack assuming the anchor output format as described in the open
>> > lightning-rfc PR is mitigated. At a glance, watching the mempool seems
>> like
>> > a far less involved process compared to modifying the state machine as
>> its
>> > defined today. By watching the mempool and implementing the changes in
>> > #lightning-rfc/688, then this issue can be mitigated _today_. lnd 0.10
>> > doesn't yet watch the mempool (but does include anchors [1]), but
>> unless I'm
>> > missing something it should be pretty straight forward to add which mor
>> or less
>> > resolves this issue all together.
>> >
>> >> not fixing this issue seems to render the whole exercise somewhat
>> useless
>> >
>> > Depends on if one considers watching the mempool a fix. But even with
>> that a
>> > base version of anchors still resolves a number of issues including:
>> > eliminating the commitment fee guessing game, allowing users to pay
>> less on
>> > force close, being able to coalesce 2nd level HTLC transactions with the
>> > same CLTV expiry, and actually being able to reliably enforce multi-hop
>> HTLC
>> > resolution.
>> >
>> >> Instead of making the HTLC output spending more free-form with
>> >> SIGHASH_ANYONECAN_PAY|SIGHASH_SINGLE, we clearly need to go the other
>> >> direction - all HTLC output spends need to be pre-signed.
>> >
>> > I'm not sure this is actually immediately workable (need to think about
>> it
>> > more). To see why, remember that the commit_sig message includes HTLC
>> > signatures for the _remote_ party's commitment transaction, so they can
>> > spend the HTLCs if they broadcast their version of the commitment (force
>> > close). If we don't somehow also _gain_ signatures (our new HTLC
>> signatures)
>> > allowing us to spend HTLCs on _their_ version of the commitment, then if
>> > they broadcast that commitment (without revoking), then we're unable to
>> > redeem any of those HTLCs at all, possibly losing money.
>>
>> Hmm, maybe the proposal wasn't clear. The idea isn't to add signatures to
>> braodcasted transactions, but instead to CPFP
>> a maybe-broadcasted transaction by sending a transaction which spends it
>> and seeing if it is accepted. You only need to
>> know the transaction's exact format (ie txid, which we do, since we sent
>> a signature for it long ago) to do this, you
>> don't have to actually *have* the fully-signed transaction (and you
>> don't).
>>
>> > In an attempt to counteract this, we might say ok, the revoke message
>> also
>> > now includes HTLC signatures for their new commitment allowing us to
>> spend
>> > our HTLCs. This resolves things in a weaker security model, but doesn't
>> > address the issue generally, as after they receive the commit_sig, they
>> can
>> > broadcast immediately, again leaving us without a way to redeem our
>> HTLCs.
>> >
>> > I'd need to think about it more, but it seems that following this path
>> would
>> > require an overhaul in the channel state machine to make presenting a
>> new
>> > commitment actually take at least _two phases_ (at least a full round
>> trip).
>> > The first phase would tender the commitment, but render them unable to
>> > broadcast it. The second phase would then <insert something something
>> > scriptless scripts here> enter a new sub-protocol which upon conclusion,
>> > gives the commitment proposer valid HTLC signatures, and gives the
>> responder
>> > what they need to be able to broadcast their commitment and claim their
>> > HTCLs in an atomic manner.
>> >
>> > -- Laolu
>> >
>> > [1]: https://github.com/lightningnetwork/lnd/pull/3821
>>
>

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Re: [bitcoin-dev] RBF Pinning with Counterparties and Competing Interest

[Matt Corallo]

[-- Attachment #1: Type: text/plain, Size: 8813 bytes --]



> On Apr 22, 2020, at 16:13, Olaoluwa Osuntokun <laolu32@gmail.com> wrote:
> 
> > Hmm, maybe the proposal wasn't clear. The idea isn't to add signatures to
> > braodcasted transactions, but instead to CPFP a maybe-broadcasted
> > transaction by sending a transaction which spends it and seeing if it is
> > accepted
> 
> Sorry I still don't follow. By "we clearly need to go the other direction -
> all HTLC output spends need to be pre-signed.", you don't mean that the HTLC
> spends of the non-broadcaster also need to be an off-chain 2-of-2 multi-sig
> covenant? If the other party isn't restricted w.r.t _how_ they can spend the
> output (non-rbf'd, ect), then I don't see how that addresses anything.

Indeed, that is what I’m suggesting. Anchor output and all. One thing we could think about is only turning it on over a certain threshold, and having a separate “only-kinda-enforceable-on-chain-HTLC-in-flight” limit.

> Also see my mail elsewhere in the thread that the other party is actually
> forced to spend their HTLC output using an RBF-replaceable transaction. With
> that, I think we're all good here? In the end both sides have the ability to
> raise the fee rate of their spending transactions with the highest winning.
> As long as one of them confirms within the CLTV-delta, then everyone is
> made whole.

It does seem like my cached recollection of RBF opt-in was incorrect but please re-read the intro email. There are a bunch of ways of doing pinning - just opting into RBF isn’t even close to enough.

> [1]: https://github.com/bitcoin/bitcoin/pull/18191
> 
> 
>> On Wed, Apr 22, 2020 at 9:50 AM Matt Corallo <lf-lists@mattcorallo.com> wrote:
>> A few replies inline.
>> 
>> On 4/22/20 12:13 AM, Olaoluwa Osuntokun wrote:
>> > Hi Matt,
>> > 
>> > 
>> >> While this is somewhat unintuitive, there are any number of good anti-DoS
>> >> reasons for this, eg:
>> > 
>> > None of these really strikes me as "good" reasons for this limitation, which
>> > is at the root of this issue, and will also plague any more complex Bitcoin
>> > contracts which rely on nested trees of transaction to confirm (CTV, Duplex,
>> > channel factories, etc). Regarding the various (seemingly arbitrary) package
>> > limits it's likely the case that any issues w.r.t computational complexity
>> > that may arise when trying to calculate evictions can be ameliorated with
>> > better choice of internal data structures.
>> > 
>> > In the end, the simplest heuristic (accept the higher fee rate package) side
>> > steps all these issues and is also the most economically rationale from a
>> > miner's perspective. Why would one prefer a higher absolute fee package
>> > (which could be very large) over another package with a higher total _fee
>> > rate_?
>> 
>> This seems like a somewhat unnecessary drive-by insult of a project you don't contribute to, but feel free to start with
>> a concrete suggestion here :).
>> 
>> >> You'll note that B would be just fine if they had a way to safely monitor the
>> >> global mempool, and while this seems like a prudent mitigation for
>> >> lightning implementations to deploy today, it is itself a quagmire of
>> >> complexity
>> > 
>> > Is it really all that complex? Assuming we're talking about just watching
>> > for a certain script template (the HTLC scipt) in the mempool to be able to
>> > pull a pre-image as soon as possible. Early versions of lnd used the mempool
>> > for commitment broadcast detection (which turned out to be a bad idea so we
>> > removed it), but at a glance I don't see why watching the mempool is so
>> > complex.
>> 
>> Because watching your own mempool is not guaranteed to work, and during upgrade cycles that include changes to the
>> policy rules an attacker could exploit your upgraded/non-upgraded status to perform the same attack.
>> 
>> >> Further, this is a really obnoxious assumption to hoist onto lightning
>> >> nodes - having an active full node with an in-sync mempool is a lot more
>> >> CPU, bandwidth, and complexity than most lightning users were expecting to
>> >> face.
>> > 
>> > This would only be a requirement for Lightning nodes that seek to be a part
>> > of the public routing network with a desire to _forward_ HTLCs. This isn't
>> > doesn't affect laptops or mobile phones which likely mostly have private
>> > channels and don't participate in HTLC forwarding. I think it's pretty
>> > reasonable to expect a "proper" routing node on the network to be backed by
>> > a full-node. The bandwidth concern is valid, but we'd need concrete numbers
>> > that compare the bandwidth over head of mempool awareness (assuming the
>> > latest and greatest mempool syncing) compared with the overhead of the
>> > channel update gossip and gossip queries over head which LN nodes face today
>> > as is to see how much worse off they really would be.
>> 
>> If mempool-watching were practical, maybe, though there are a number of folks who are talking about designing
>> partially-offline local lightning hubs which would be rendered impractical.
>> 
>> > As detailed a bit below, if nodes watch the mempool, then this class of
>> > attack assuming the anchor output format as described in the open
>> > lightning-rfc PR is mitigated. At a glance, watching the mempool seems like
>> > a far less involved process compared to modifying the state machine as its
>> > defined today. By watching the mempool and implementing the changes in
>> > #lightning-rfc/688, then this issue can be mitigated _today_. lnd 0.10
>> > doesn't yet watch the mempool (but does include anchors [1]), but unless I'm
>> > missing something it should be pretty straight forward to add which mor or less
>> > resolves this issue all together.
>> > 
>> >> not fixing this issue seems to render the whole exercise somewhat useless
>> > 
>> > Depends on if one considers watching the mempool a fix. But even with that a
>> > base version of anchors still resolves a number of issues including:
>> > eliminating the commitment fee guessing game, allowing users to pay less on
>> > force close, being able to coalesce 2nd level HTLC transactions with the
>> > same CLTV expiry, and actually being able to reliably enforce multi-hop HTLC
>> > resolution.
>> > 
>> >> Instead of making the HTLC output spending more free-form with
>> >> SIGHASH_ANYONECAN_PAY|SIGHASH_SINGLE, we clearly need to go the other
>> >> direction - all HTLC output spends need to be pre-signed.
>> > 
>> > I'm not sure this is actually immediately workable (need to think about it
>> > more). To see why, remember that the commit_sig message includes HTLC
>> > signatures for the _remote_ party's commitment transaction, so they can
>> > spend the HTLCs if they broadcast their version of the commitment (force
>> > close). If we don't somehow also _gain_ signatures (our new HTLC signatures)
>> > allowing us to spend HTLCs on _their_ version of the commitment, then if
>> > they broadcast that commitment (without revoking), then we're unable to
>> > redeem any of those HTLCs at all, possibly losing money.
>> 
>> Hmm, maybe the proposal wasn't clear. The idea isn't to add signatures to braodcasted transactions, but instead to CPFP
>> a maybe-broadcasted transaction by sending a transaction which spends it and seeing if it is accepted. You only need to
>> know the transaction's exact format (ie txid, which we do, since we sent a signature for it long ago) to do this, you
>> don't have to actually *have* the fully-signed transaction (and you don't).
>> 
>> > In an attempt to counteract this, we might say ok, the revoke message also
>> > now includes HTLC signatures for their new commitment allowing us to spend
>> > our HTLCs. This resolves things in a weaker security model, but doesn't
>> > address the issue generally, as after they receive the commit_sig, they can
>> > broadcast immediately, again leaving us without a way to redeem our HTLCs.
>> > 
>> > I'd need to think about it more, but it seems that following this path would
>> > require an overhaul in the channel state machine to make presenting a new
>> > commitment actually take at least _two phases_ (at least a full round trip).
>> > The first phase would tender the commitment, but render them unable to
>> > broadcast it. The second phase would then <insert something something
>> > scriptless scripts here> enter a new sub-protocol which upon conclusion,
>> > gives the commitment proposer valid HTLC signatures, and gives the responder
>> > what they need to be able to broadcast their commitment and claim their
>> > HTCLs in an atomic manner.
>> > 
>> > -- Laolu
>> > 
>> > [1]: https://github.com/lightningnetwork/lnd/pull/3821

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Re: [bitcoin-dev] RBF Pinning with Counterparties and Competing Interest

[Olaoluwa Osuntokun]

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> This seems like a somewhat unnecessary drive-by insult of a project you
> don't contribute to, but feel free to start with a concrete suggestion
> here :).

This wasn't intended as an insult at all. I'm simply saying if there's
concern about worst case eviction/replacement, optimizations likely exist.
Other developers that are interested in more complex multi-transaction
contracts have realized this as well, and there're various open PRs that
attempt to propose such optimizations [1].

> Hmm, maybe the proposal wasn't clear. The idea isn't to add signatures to
> braodcasted transactions, but instead to CPFP a maybe-broadcasted
> transaction by sending a transaction which spends it and seeing if it is
> accepted

Sorry I still don't follow. By "we clearly need to go the other direction -
all HTLC output spends need to be pre-signed.", you don't mean that the HTLC
spends of the non-broadcaster also need to be an off-chain 2-of-2 multi-sig
covenant? If the other party isn't restricted w.r.t _how_ they can spend the
output (non-rbf'd, ect), then I don't see how that addresses anything.

Also see my mail elsewhere in the thread that the other party is actually
forced to spend their HTLC output using an RBF-replaceable transaction. With
that, I think we're all good here? In the end both sides have the ability to
raise the fee rate of their spending transactions with the highest winning.
As long as one of them confirms within the CLTV-delta, then everyone is
made whole.


[1]: https://github.com/bitcoin/bitcoin/pull/18191


On Wed, Apr 22, 2020 at 9:50 AM Matt Corallo <lf-lists@mattcorallo.com>
wrote:

> A few replies inline.
>
> On 4/22/20 12:13 AM, Olaoluwa Osuntokun wrote:
> > Hi Matt,
> >
> >
> >> While this is somewhat unintuitive, there are any number of good
> anti-DoS
> >> reasons for this, eg:
> >
> > None of these really strikes me as "good" reasons for this limitation,
> which
> > is at the root of this issue, and will also plague any more complex
> Bitcoin
> > contracts which rely on nested trees of transaction to confirm (CTV,
> Duplex,
> > channel factories, etc). Regarding the various (seemingly arbitrary)
> package
> > limits it's likely the case that any issues w.r.t computational
> complexity
> > that may arise when trying to calculate evictions can be ameliorated with
> > better choice of internal data structures.
> >
> > In the end, the simplest heuristic (accept the higher fee rate package)
> side
> > steps all these issues and is also the most economically rationale from a
> > miner's perspective. Why would one prefer a higher absolute fee package
> > (which could be very large) over another package with a higher total _fee
> > rate_?
>
> This seems like a somewhat unnecessary drive-by insult of a project you
> don't contribute to, but feel free to start with
> a concrete suggestion here :).
>
> >> You'll note that B would be just fine if they had a way to safely
> monitor the
> >> global mempool, and while this seems like a prudent mitigation for
> >> lightning implementations to deploy today, it is itself a quagmire of
> >> complexity
> >
> > Is it really all that complex? Assuming we're talking about just watching
> > for a certain script template (the HTLC scipt) in the mempool to be able
> to
> > pull a pre-image as soon as possible. Early versions of lnd used the
> mempool
> > for commitment broadcast detection (which turned out to be a bad idea so
> we
> > removed it), but at a glance I don't see why watching the mempool is so
> > complex.
>
> Because watching your own mempool is not guaranteed to work, and during
> upgrade cycles that include changes to the
> policy rules an attacker could exploit your upgraded/non-upgraded status
> to perform the same attack.
>
> >> Further, this is a really obnoxious assumption to hoist onto lightning
> >> nodes - having an active full node with an in-sync mempool is a lot more
> >> CPU, bandwidth, and complexity than most lightning users were expecting
> to
> >> face.
> >
> > This would only be a requirement for Lightning nodes that seek to be a
> part
> > of the public routing network with a desire to _forward_ HTLCs. This
> isn't
> > doesn't affect laptops or mobile phones which likely mostly have private
> > channels and don't participate in HTLC forwarding. I think it's pretty
> > reasonable to expect a "proper" routing node on the network to be backed
> by
> > a full-node. The bandwidth concern is valid, but we'd need concrete
> numbers
> > that compare the bandwidth over head of mempool awareness (assuming the
> > latest and greatest mempool syncing) compared with the overhead of the
> > channel update gossip and gossip queries over head which LN nodes face
> today
> > as is to see how much worse off they really would be.
>
> If mempool-watching were practical, maybe, though there are a number of
> folks who are talking about designing
> partially-offline local lightning hubs which would be rendered impractical.
>
> > As detailed a bit below, if nodes watch the mempool, then this class of
> > attack assuming the anchor output format as described in the open
> > lightning-rfc PR is mitigated. At a glance, watching the mempool seems
> like
> > a far less involved process compared to modifying the state machine as
> its
> > defined today. By watching the mempool and implementing the changes in
> > #lightning-rfc/688, then this issue can be mitigated _today_. lnd 0.10
> > doesn't yet watch the mempool (but does include anchors [1]), but unless
> I'm
> > missing something it should be pretty straight forward to add which mor
> or less
> > resolves this issue all together.
> >
> >> not fixing this issue seems to render the whole exercise somewhat
> useless
> >
> > Depends on if one considers watching the mempool a fix. But even with
> that a
> > base version of anchors still resolves a number of issues including:
> > eliminating the commitment fee guessing game, allowing users to pay less
> on
> > force close, being able to coalesce 2nd level HTLC transactions with the
> > same CLTV expiry, and actually being able to reliably enforce multi-hop
> HTLC
> > resolution.
> >
> >> Instead of making the HTLC output spending more free-form with
> >> SIGHASH_ANYONECAN_PAY|SIGHASH_SINGLE, we clearly need to go the other
> >> direction - all HTLC output spends need to be pre-signed.
> >
> > I'm not sure this is actually immediately workable (need to think about
> it
> > more). To see why, remember that the commit_sig message includes HTLC
> > signatures for the _remote_ party's commitment transaction, so they can
> > spend the HTLCs if they broadcast their version of the commitment (force
> > close). If we don't somehow also _gain_ signatures (our new HTLC
> signatures)
> > allowing us to spend HTLCs on _their_ version of the commitment, then if
> > they broadcast that commitment (without revoking), then we're unable to
> > redeem any of those HTLCs at all, possibly losing money.
>
> Hmm, maybe the proposal wasn't clear. The idea isn't to add signatures to
> braodcasted transactions, but instead to CPFP
> a maybe-broadcasted transaction by sending a transaction which spends it
> and seeing if it is accepted. You only need to
> know the transaction's exact format (ie txid, which we do, since we sent a
> signature for it long ago) to do this, you
> don't have to actually *have* the fully-signed transaction (and you don't).
>
> > In an attempt to counteract this, we might say ok, the revoke message
> also
> > now includes HTLC signatures for their new commitment allowing us to
> spend
> > our HTLCs. This resolves things in a weaker security model, but doesn't
> > address the issue generally, as after they receive the commit_sig, they
> can
> > broadcast immediately, again leaving us without a way to redeem our
> HTLCs.
> >
> > I'd need to think about it more, but it seems that following this path
> would
> > require an overhaul in the channel state machine to make presenting a new
> > commitment actually take at least _two phases_ (at least a full round
> trip).
> > The first phase would tender the commitment, but render them unable to
> > broadcast it. The second phase would then <insert something something
> > scriptless scripts here> enter a new sub-protocol which upon conclusion,
> > gives the commitment proposer valid HTLC signatures, and gives the
> responder
> > what they need to be able to broadcast their commitment and claim their
> > HTCLs in an atomic manner.
> >
> > -- Laolu
> >
> > [1]: https://github.com/lightningnetwork/lnd/pull/3821
>

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Re: [bitcoin-dev] RBF Pinning with Counterparties and Competing Interest

[David A. Harding]

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On Wed, Apr 22, 2020 at 03:03:29PM -0400, Antoine Riard wrote:
> > In that case, would it be worth re-implementing something like a BIP61
> reject message but with an extension that returns the txids of any
> conflicts?
> 
> That's an interesting idea, but an attacker can create a local conflict in
> your mempool

You don't need a mempool to send a transaction.  You can just open
connections to random Bitcoin nodes directly and try sending your
transaction.  That's what a lite client is going to do anyway.  If the
pinned transaction is in the mempools of a significant number of Bitcoin
nodes, then it should take just a few random connections to find one of
those nodes, learn about the conflict, and download the pinned
transaction.

If that's not acceptable, you could find some other way to poll a
significant number of people with mempools, e.g. BIP35 mempool messages
or reusing the payment hash in a bunch of 1 msat probes to LN nodes who
opt-in to scanning their bitcoind's mempools for a corresponding
preimage.

-Dave

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Re: [bitcoin-dev] RBF Pinning with Counterparties and Competing Interest

[Antoine Riard]

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> In that case, would it be worth re-implementing something like a BIP61
reject message but with an extension that returns the txids of any
conflicts?

That's an interesting idea, but an attacker can create a local conflict in
your mempool
and then send the preimage tx to make hit recentRejects until next tip so
when the rejection code with conflict is received transaction isn't going
to be fetched.
Of course you can make an exception for this, but seems a DoS vector...

And also if you have a private full-node and connect only to 8 outbounds,
an attacker
can do a bit of tx-relay topology discovery and blind your tx-relay peers
too...

I think p2p/mempool hardening measures will only make attack harder but not
erase it, we
should avoid tie too much the security model of Lightning on a given p2p
topology. If you don't
do manual peering (whitelist,addnode), this one may change without
visibility (like stale tip).



Le mer. 22 avr. 2020 à 14:25, David A. Harding via bitcoin-dev <
bitcoin-dev@lists.linuxfoundation.org> a écrit :

> On Mon, Apr 20, 2020 at 10:43:14PM -0400, Matt Corallo via Lightning-dev
> wrote:
> > A lightning counterparty (C, who received the HTLC from B, who
> > received it from A) today could, if B broadcasts the commitment
> > transaction, spend an HTLC using the preimage with a low-fee,
> > RBF-disabled transaction.  After a few blocks, A could claim the HTLC
> > from B via the timeout mechanism, and then after a few days, C could
> > get the HTLC-claiming transaction mined via some out-of-band agreement
> > with a small miner. This leaves B short the HTLC value.
>
> IIUC, the main problem is honest Bob will broadcast a transaction
> without realizing it conflicts with a pinned transaction that's already
> in most node's mempools.  If Bob knew about the pinned transaction and
> could get a copy of it, he'd be fine.
>
> In that case, would it be worth re-implementing something like a BIP61
> reject message but with an extension that returns the txids of any
> conflicts?  For example, when Bob connects to a bunch of Bitcoin nodes
> and sends his conflicting transaction, the nodes would reply with
> something like "rejected: code 123: conflicts with txid 0123...cdef".
> Bob could then reply with a a getdata('tx', '0123...cdef') to get the
> pinned transaction, parse out its preimage, and resolve the HTLC.
>
> This approach isn't perfect (if it even makes sense at all---I could be
> misunderstanding the problem) because one of the problems that caused
> BIP61 to be disabled in Bitcoin Core was its unreliability, but I think
> if Bob had at least one honest peer that had the pinned transaction in
> its mempool and which implemented reject-with-conflicting-txid, Bob
> might be ok.
>
> -Dave
> _______________________________________________
> bitcoin-dev mailing list
> bitcoin-dev@lists.linuxfoundation.org
> https://lists.linuxfoundation.org/mailman/listinfo/bitcoin-dev
>

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Re: [bitcoin-dev] RBF Pinning with Counterparties and Competing Interest

[David A. Harding]

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On Mon, Apr 20, 2020 at 10:43:14PM -0400, Matt Corallo via Lightning-dev wrote:
> A lightning counterparty (C, who received the HTLC from B, who
> received it from A) today could, if B broadcasts the commitment
> transaction, spend an HTLC using the preimage with a low-fee,
> RBF-disabled transaction.  After a few blocks, A could claim the HTLC
> from B via the timeout mechanism, and then after a few days, C could
> get the HTLC-claiming transaction mined via some out-of-band agreement
> with a small miner. This leaves B short the HTLC value.

IIUC, the main problem is honest Bob will broadcast a transaction
without realizing it conflicts with a pinned transaction that's already
in most node's mempools.  If Bob knew about the pinned transaction and
could get a copy of it, he'd be fine.

In that case, would it be worth re-implementing something like a BIP61
reject message but with an extension that returns the txids of any
conflicts?  For example, when Bob connects to a bunch of Bitcoin nodes
and sends his conflicting transaction, the nodes would reply with
something like "rejected: code 123: conflicts with txid 0123...cdef".
Bob could then reply with a a getdata('tx', '0123...cdef') to get the
pinned transaction, parse out its preimage, and resolve the HTLC.

This approach isn't perfect (if it even makes sense at all---I could be
misunderstanding the problem) because one of the problems that caused
BIP61 to be disabled in Bitcoin Core was its unreliability, but I think
if Bob had at least one honest peer that had the pinned transaction in
its mempool and which implemented reject-with-conflicting-txid, Bob
might be ok.

-Dave

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Re: [bitcoin-dev] RBF Pinning with Counterparties and Competing Interest

[Matt Corallo]

A few replies inline.

On 4/22/20 12:13 AM, Olaoluwa Osuntokun wrote:
> Hi Matt,
> 
> 
>> While this is somewhat unintuitive, there are any number of good anti-DoS
>> reasons for this, eg:
> 
> None of these really strikes me as "good" reasons for this limitation, which
> is at the root of this issue, and will also plague any more complex Bitcoin
> contracts which rely on nested trees of transaction to confirm (CTV, Duplex,
> channel factories, etc). Regarding the various (seemingly arbitrary) package
> limits it's likely the case that any issues w.r.t computational complexity
> that may arise when trying to calculate evictions can be ameliorated with
> better choice of internal data structures.
> 
> In the end, the simplest heuristic (accept the higher fee rate package) side
> steps all these issues and is also the most economically rationale from a
> miner's perspective. Why would one prefer a higher absolute fee package
> (which could be very large) over another package with a higher total _fee
> rate_?

This seems like a somewhat unnecessary drive-by insult of a project you don't contribute to, but feel free to start with
a concrete suggestion here :).

>> You'll note that B would be just fine if they had a way to safely monitor the
>> global mempool, and while this seems like a prudent mitigation for
>> lightning implementations to deploy today, it is itself a quagmire of
>> complexity
> 
> Is it really all that complex? Assuming we're talking about just watching
> for a certain script template (the HTLC scipt) in the mempool to be able to
> pull a pre-image as soon as possible. Early versions of lnd used the mempool
> for commitment broadcast detection (which turned out to be a bad idea so we
> removed it), but at a glance I don't see why watching the mempool is so
> complex.

Because watching your own mempool is not guaranteed to work, and during upgrade cycles that include changes to the
policy rules an attacker could exploit your upgraded/non-upgraded status to perform the same attack.

>> Further, this is a really obnoxious assumption to hoist onto lightning
>> nodes - having an active full node with an in-sync mempool is a lot more
>> CPU, bandwidth, and complexity than most lightning users were expecting to
>> face.
> 
> This would only be a requirement for Lightning nodes that seek to be a part
> of the public routing network with a desire to _forward_ HTLCs. This isn't
> doesn't affect laptops or mobile phones which likely mostly have private
> channels and don't participate in HTLC forwarding. I think it's pretty
> reasonable to expect a "proper" routing node on the network to be backed by
> a full-node. The bandwidth concern is valid, but we'd need concrete numbers
> that compare the bandwidth over head of mempool awareness (assuming the
> latest and greatest mempool syncing) compared with the overhead of the
> channel update gossip and gossip queries over head which LN nodes face today
> as is to see how much worse off they really would be.

If mempool-watching were practical, maybe, though there are a number of folks who are talking about designing
partially-offline local lightning hubs which would be rendered impractical.

> As detailed a bit below, if nodes watch the mempool, then this class of
> attack assuming the anchor output format as described in the open
> lightning-rfc PR is mitigated. At a glance, watching the mempool seems like
> a far less involved process compared to modifying the state machine as its
> defined today. By watching the mempool and implementing the changes in
> #lightning-rfc/688, then this issue can be mitigated _today_. lnd 0.10
> doesn't yet watch the mempool (but does include anchors [1]), but unless I'm
> missing something it should be pretty straight forward to add which mor or less
> resolves this issue all together.
> 
>> not fixing this issue seems to render the whole exercise somewhat useless
> 
> Depends on if one considers watching the mempool a fix. But even with that a
> base version of anchors still resolves a number of issues including:
> eliminating the commitment fee guessing game, allowing users to pay less on
> force close, being able to coalesce 2nd level HTLC transactions with the
> same CLTV expiry, and actually being able to reliably enforce multi-hop HTLC
> resolution.
> 
>> Instead of making the HTLC output spending more free-form with
>> SIGHASH_ANYONECAN_PAY|SIGHASH_SINGLE, we clearly need to go the other
>> direction - all HTLC output spends need to be pre-signed.
> 
> I'm not sure this is actually immediately workable (need to think about it
> more). To see why, remember that the commit_sig message includes HTLC
> signatures for the _remote_ party's commitment transaction, so they can
> spend the HTLCs if they broadcast their version of the commitment (force
> close). If we don't somehow also _gain_ signatures (our new HTLC signatures)
> allowing us to spend HTLCs on _their_ version of the commitment, then if
> they broadcast that commitment (without revoking), then we're unable to
> redeem any of those HTLCs at all, possibly losing money.

Hmm, maybe the proposal wasn't clear. The idea isn't to add signatures to braodcasted transactions, but instead to CPFP
a maybe-broadcasted transaction by sending a transaction which spends it and seeing if it is accepted. You only need to
know the transaction's exact format (ie txid, which we do, since we sent a signature for it long ago) to do this, you
don't have to actually *have* the fully-signed transaction (and you don't).

> In an attempt to counteract this, we might say ok, the revoke message also
> now includes HTLC signatures for their new commitment allowing us to spend
> our HTLCs. This resolves things in a weaker security model, but doesn't
> address the issue generally, as after they receive the commit_sig, they can
> broadcast immediately, again leaving us without a way to redeem our HTLCs.
> 
> I'd need to think about it more, but it seems that following this path would
> require an overhaul in the channel state machine to make presenting a new
> commitment actually take at least _two phases_ (at least a full round trip).
> The first phase would tender the commitment, but render them unable to
> broadcast it. The second phase would then <insert something something
> scriptless scripts here> enter a new sub-protocol which upon conclusion,
> gives the commitment proposer valid HTLC signatures, and gives the responder
> what they need to be able to broadcast their commitment and claim their
> HTCLs in an atomic manner.
> 
> -- Laolu
> 
> [1]: https://github.com/lightningnetwork/lnd/pull/3821

Re: [bitcoin-dev] RBF Pinning with Counterparties and Competing Interest

[David A. Harding]

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On Tue, Apr 21, 2020 at 09:13:34PM -0700, Olaoluwa Osuntokun wrote:
> On Mon, Apr 20, 2020 at 10:43:14PM -0400, Matt Corallo via Lightning-dev wrote:
> > While this is somewhat unintuitive, there are any number of good anti-DoS
> > reasons for this, eg:
> 
> None of these really strikes me as "good" reasons for this limitation
> [...]
> In the end, the simplest heuristic (accept the higher fee rate
> package) side steps all these issues and is also the most economically
> rationale from a miner's perspective. 

I think it's important to remember than mempool behavior affects not
just miners but also relay nodes.  Miner costs, such as bandwidth usage,
can be directly offset by their earned block rewards, so miners can be
much more tolerant of wasted bandwidth than relay nodes who receive no
direct financial compensation for the processing and relay of
unconfirmed transactions.[1]

> Why would one prefer a higher absolute fee package (which could be
> very large) over another package with a higher total _fee rate_?

To avoid the excessive wasting of bandwidth.  Bitcoin Core's defaults
require each replacement pay a feerate of 10 nBTC/vbyte over an existing
transaction or package, and the defaults also allow transactions or
packages up to 100,000 vbytes in size (~400,000 bytes).  So, without
enforcement of BIP125 rule 3, an attacker starting at the minimum
default relay fee also of 10 nBTC/vbyte could do the following:

- Create a ~400,000 bytes tx with feerate of 10 nBTC/vbyte (1 mBTC total
  fee)

- Replace that transaction with 400,000 new bytes at a feerate of 20
  nBTC/vbyte (2 mBTC total fee)

- Perform 998 additional replacements, each increasing the feerate by 10
  nBTC/vbyte and the total fee by 1 mBTC, using a total of 400 megabytes
  (including the original transaction and first replacement) to
  ultimately produce a transaction with a feerate of 10,000 nBTC/vbyte
  (1 BTC total fee)

- Perform one final replacement of the latest 400,000 byte transaction
  with a ~200-byte (~150 vbyte) 1-in, 1-out P2WPKH transaction that pays
  a feerate of 10,010 nBTC/vbyte (1.5 mBTC total fee)

Assuming 50,000 active relay nodes and today's BTC price of ~$7,000
USD/BTC, the above scenario would allow an attacker to waste a
collective 20 terabytes of network bandwidth for a total fee cost of
$10.50.  And, of course, the attacker could run multiple attacks of this
sort in parallel, quickly swamping the network.

To use the above concrete example to repeat the point made at the
beginning of this email: miners might be willing to accept the waste of
400 MB of bandwidth in order to gain a $10.50 fee, but I think very few
relay nodes could function for long under an onslaught of such behavior.

-Dave

[1] The reward to relay nodes of maintaining the public relay network is
    that it helps protect against miner centralization.  If there was no
    public relay network, users would need to submit transactions
    directly to miners or via a privately-controlled relay network.
    Users desiring timely confirmation (and operators of private relay
    networks) would have a large incentive to get transactions to the
    largest miners but only a small incentive to get the transaction to
    the smaller miners, increasing the economies of scale in mining and
    furthering centralization.

    Although users of Bitcoin benefit by reducing mining centralization
    pressure, I don't think we can expect most users to be willing to
    bear large costs in defense of benefits which are largely intangible
    (until they're gone), so we must try to keep the cost of operating a
    relay node within a reasonable margin of the cost of operating a
    minimal-bandwidth blocks-only node.

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Re: [bitcoin-dev] RBF Pinning with Counterparties and Competing Interest

[Olaoluwa Osuntokun]

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Hi Matt,


> While this is somewhat unintuitive, there are any number of good anti-DoS
> reasons for this, eg:

None of these really strikes me as "good" reasons for this limitation, which
is at the root of this issue, and will also plague any more complex Bitcoin
contracts which rely on nested trees of transaction to confirm (CTV, Duplex,
channel factories, etc). Regarding the various (seemingly arbitrary) package
limits it's likely the case that any issues w.r.t computational complexity
that may arise when trying to calculate evictions can be ameliorated with
better choice of internal data structures.

In the end, the simplest heuristic (accept the higher fee rate package) side
steps all these issues and is also the most economically rationale from a
miner's perspective. Why would one prefer a higher absolute fee package
(which could be very large) over another package with a higher total _fee
rate_?

> You'll note that B would be just fine if they had a way to safely monitor
the
> global mempool, and while this seems like a prudent mitigation for
> lightning implementations to deploy today, it is itself a quagmire of
> complexity

Is it really all that complex? Assuming we're talking about just watching
for a certain script template (the HTLC scipt) in the mempool to be able to
pull a pre-image as soon as possible. Early versions of lnd used the mempool
for commitment broadcast detection (which turned out to be a bad idea so we
removed it), but at a glance I don't see why watching the mempool is so
complex.

> Further, this is a really obnoxious assumption to hoist onto lightning
> nodes - having an active full node with an in-sync mempool is a lot more
> CPU, bandwidth, and complexity than most lightning users were expecting to
> face.

This would only be a requirement for Lightning nodes that seek to be a part
of the public routing network with a desire to _forward_ HTLCs. This isn't
doesn't affect laptops or mobile phones which likely mostly have private
channels and don't participate in HTLC forwarding. I think it's pretty
reasonable to expect a "proper" routing node on the network to be backed by
a full-node. The bandwidth concern is valid, but we'd need concrete numbers
that compare the bandwidth over head of mempool awareness (assuming the
latest and greatest mempool syncing) compared with the overhead of the
channel update gossip and gossip queries over head which LN nodes face today
as is to see how much worse off they really would be.

As detailed a bit below, if nodes watch the mempool, then this class of
attack assuming the anchor output format as described in the open
lightning-rfc PR is mitigated. At a glance, watching the mempool seems like
a far less involved process compared to modifying the state machine as its
defined today. By watching the mempool and implementing the changes in
#lightning-rfc/688, then this issue can be mitigated _today_. lnd 0.10
doesn't yet watch the mempool (but does include anchors [1]), but unless I'm
missing something it should be pretty straight forward to add which mor or
less
resolves this issue all together.

> not fixing this issue seems to render the whole exercise somewhat useless

Depends on if one considers watching the mempool a fix. But even with that a
base version of anchors still resolves a number of issues including:
eliminating the commitment fee guessing game, allowing users to pay less on
force close, being able to coalesce 2nd level HTLC transactions with the
same CLTV expiry, and actually being able to reliably enforce multi-hop HTLC
resolution.

> Instead of making the HTLC output spending more free-form with
> SIGHASH_ANYONECAN_PAY|SIGHASH_SINGLE, we clearly need to go the other
> direction - all HTLC output spends need to be pre-signed.

I'm not sure this is actually immediately workable (need to think about it
more). To see why, remember that the commit_sig message includes HTLC
signatures for the _remote_ party's commitment transaction, so they can
spend the HTLCs if they broadcast their version of the commitment (force
close). If we don't somehow also _gain_ signatures (our new HTLC signatures)
allowing us to spend HTLCs on _their_ version of the commitment, then if
they broadcast that commitment (without revoking), then we're unable to
redeem any of those HTLCs at all, possibly losing money.

In an attempt to counteract this, we might say ok, the revoke message also
now includes HTLC signatures for their new commitment allowing us to spend
our HTLCs. This resolves things in a weaker security model, but doesn't
address the issue generally, as after they receive the commit_sig, they can
broadcast immediately, again leaving us without a way to redeem our HTLCs.

I'd need to think about it more, but it seems that following this path would
require an overhaul in the channel state machine to make presenting a new
commitment actually take at least _two phases_ (at least a full round trip).
The first phase would tender the commitment, but render them unable to
broadcast it. The second phase would then <insert something something
scriptless scripts here> enter a new sub-protocol which upon conclusion,
gives the commitment proposer valid HTLC signatures, and gives the responder
what they need to be able to broadcast their commitment and claim their
HTCLs in an atomic manner.

-- Laolu

[1]: https://github.com/lightningnetwork/lnd/pull/3821

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[bitcoin-dev] RBF Pinning with Counterparties and Competing Interest

[Matt Corallo]

[Hi bitcoin-dev, in lightning-land we recently discovered some quite frustrating issues which I thought may merit
broader discussion]

While reviewing the new anchor outputs spec [1] last week, I discovered it introduced a rather nasty ability for a user
to use RBF Pinning to steal in-flight HTLCs which are being enforced on-chain. Sadly, Antoine pointed out that this is
an issue in today's light as well, though see [2] for qualifications. After some back-and-forth with a few other
lightning folks, it seems clear that there is no easy+sane fix (and the practicality of exploitation today seems
incredibly low), so soliciting ideas publicly may be the best step forward.

I've included lots of background for those who aren't super comfortable with lightning's current design, but if you
already know it well, you can skip at least background 1 & 2.

Background - Lightning's Transactions (you can skip this)
=====================================

As many of you likely know, lightning today does all its update mechanics through:
 a) a 2-of-2 multisig output, locking in the channel,
 b) a "commitment transaction", which spends that output: i) back to its owners, ii) to "HTLC outputs",
 c) HTLC transactions which spend the relevant commitment transaction HTLC outputs.

This somewhat awkward third layer of transactions is required to allow HTLC timeouts to be significantly lower than the
time window during which a counterparty may be punished for broadcasting a revoked state. That is to say, you want to
"lock-in" the resolution of an HTLC output (ie by providing the hash lock preimage on-chain) by a fixed block height
(likely a few hours from the HTLC creation), but the punishment mechanism needs to occur based on a sequence height
(possibly a day or more after transaction broadcast).

As Bitcoin has no covanents, this must occur using pre-signed transactions - namely "HTLC-Success" and "HTLC-Timeout"
transactions, which finalize the resolution of an HTLC, but have a sequence-lock for some time during which the funds
may be taken if they had previously been revoked. To avoid needless delays, if the counterparty which did *not*
broadcast the commitment transaction wishes to claim the HTLC value, they may do so immediately (as there is no reason
to punish the non-broadcaster for having *not* broadcasted a revoked state). Thus, we have four possible HTLC
resolutions depending on the combination of which side broadcast the HTLC and which side sent the HTLC (ie who can claim
it vs who can claim it after time-out):

 1) pre-signed HTLC-Success transaction, providing the preimage in the witness and sent to an output which is sequence-
    locked for some time to provide the non-broadcasting side the opportunity to take the funds,
 2) pre-signed HTLC-Timeout transaction, time-locked to N, providing no preimage, but with a similar sequence lock and
    output as above,
 3) non-pre-signed HTLC claim, providing the preimage in the witness and unencumbered by the broadcaster's signature,
 4) non-pre-signed HTLC timeout, OP_CLTV to N, and similarly unencumbered.

Background 2 - RBF Pinning (you can skip this)
==========================

Bitcoin Core's general policy on RBF transactions is that if a counterparty (either to the transaction, eg in lightning,
or not, eg a P2P node which sees the transaction early) can modify a transaction, especially if they can add an input or
output, they can prevent it from confirming in a world where there exists a mempool (ie in a world where Bitcoin works).
While this is somewhat unintuitive, there are any number of good anti-DoS reasons for this, eg:
 * (ok, this is a bad reason, but) a child transaction could be marked 'non-RBF', which would mean allowing the parent
   be RBF'd would violate the assumptions those who look at the RBF opt-in marking make,
 * a parent may be very large, but low feerate - this requires the RBF attempt to "pay for its own relay" and include a
   large absolute fee just to get into the mempool,
 * one of the various package size limits is at its maximum, and depending on the structure of the package the
   computational complexity of calculation evictions may be more than we want to do for a given transaction.

Background 3 - "The RBF Carve-Out" (you can skip this)
==================================

In today's lightning, we have a negotiation of what we expect the future feerate to be when one party goes to close the
channel. All the pre-signed transactions above are constructed with this fee-rate in mind, and, given they are all
pre-signed, adding additional fee to them is not generally an option. This is obviously a very maddening prediction
game, especially when the security consequences for negotiating a value which is wrong may allow your counterparty to
broadcast and time out HTLCs which you otherwise have the preimage for. To remove this quirk, we came up with an idea a
year or two back now called "anchor outputs" (aka the RBF carve-out for those in Bitcoin-land) - a neat trick to allow
both counterparties to add fees to a transaction which is being broadcast without getting into the quagmire that is RBF
pinning. Specifically, we added a rule to Bitcoin Core which allows for transactions which have a narrow structure to be
CPFP'd trivially by either counterparty, irrespective of what the other counterparty does! In order to meet this
structure, the commitment transaction (b) must have two (potentially-)additional outputs, each which only one side can
spend, and every other output must have a CSV lock associated with it. This is great and there is (finally) movement to
deploy this.

RBF Pinning HTLC Transactions (aka "Oh, wait, I can steal funds, how, now?")
=============================

You'll note that in the discussion of RBF pinning we were pretty broad, and that that discussion seems to in fact cover
our HTLC outputs, at least when spent via (3) or (4). It does, and in fact this is a pretty severe issue in today's
lightning protocol [2]. A lightning counterparty (C, who received the HTLC from B, who received it from A) today could,
if B broadcasts the commitment transaction, spend an HTLC using the preimage with a low-fee, RBF-disabled transaction.
After a few blocks, A could claim the HTLC from B via the timeout mechanism, and then after a few days, C could get the
HTLC-claiming transaction mined via some out-of-band agreement with a small miner. This leaves B short the HTLC value.

You'll note that B would be just fine if they had a way to safely monitor the global mempool, and while this seems like
a prudent mitigation for lightning implementations to deploy today, it is itself a quagmire of complexity, especially
when you consider differences in relay policy during an upgrade cycle and how those may effect propagation through the
P2P network. Further, this is a really obnoxious assumption to hoist onto lightning nodes - having an active full node
with an in-sync mempool is a lot more CPU, bandwidth, and complexity than most lightning users were expecting to face.

It seems highly likely we could come up with some kind of variant of of the RBF Carve-Out to solve this problem, though
probably much more specific to this particular transaction structure - imagine a rule which allowed B to RBF C's low-fee
HTLC claim transaction, without ever seeing it. This could be accomplished by locking down the transaction types in (3)
and (4) by pre-signing them (just, like (1) and (2)) and then using some kind of policy rule to allow only the addition
of additional confirmed inputs and one (small) output. This would mean that B knows that either C's transaction has high
fee, or B's reasonably-higher-fee transaction will meet the RBF rules and replace C's maliciousness.

While the original RBF Carve-Out was a little awkward, its structure was sufficiently generic that other off-chain
protocols could reasonably (need to) take advantage of it, however a rule to address this issue seems like it would need
to be highly tailored to lightning, which doesn't seem acceptable (there appears to be a way to shoehorn the existing
carve-out, but it results in a ton of extra on-chain volume).

Strategies involving full-RBF for transactions not at the top of the mempool, (slow-)full-mempool-sync allowing
mempool-total-fee decreases and relaxations of the RBF rules would be welcome, but without a ton of legwork to include
things like package relay I'm not convinced they would suffice. This of course doesn't even account for the possibility
of similar issues given rely policy differences.

PS For Lightning-Dev Folks (aka "An Alternative Anchor Proposal")
==========================

Given the anchor outputs proposal seeks to expand lightning's security in a world where Bitcoin is running at
steady-state and the mempool reliably has transactions in it, not fixing this issue seems to render the whole exercise
somewhat useless (not to mention that the current design makes this attack more obvious and provides several alternative
paths to exploitation).

An alternative, albeit not ideal anchor outputs proposal is as follows:

 * Instead of making the HTLC output spending more free-form with SIGHASH_ANYONECAN_PAY|SIGHASH_SINGLE, we clearly need
   to go the other direction - all HTLC output spends need to be pre-signed.
 * Sadly, and this really hurts from an on-chain-tx-size perspective, we have to include anchor outputs in the HTLC
   transactions (intuitively I think all of them, but at least HTLC-fulfilling transactions definitely).
 * Our poor B, being exploited, above, will attempt to spend their anchor output with a CPFP even if they aren't sure C
   has broadcast the HTLC-Success transaction! This is fine as B already knows the txid, and just wants to learn whats
   in the witness (assuming there is one).

For those from bitcoin-dev still reading who are thinking "blah, you clearly don't need anything else, you have a
solution!" we're talking about extra outputs out the wazoo for hopefully-unnecessary edge cases involving transactions
entering the mempool which a user wants to avoid confirming! This severely cuts into the lowest-value HTLCs which can be
sent "safely" and adds a significant social cost of extra low-value, possibly-uneconomical outputs in the chain.

Still, lacking a better idea, and with a strong desire to make lightning's security more practical in a world where
Bitcoin miners are paid to operate, we should probably start considering moving forward with this.

Thanks for reading,
Matt

[1] https://github.com/lightningnetwork/lightning-rfc/pull/688

[2] I'll note that while it is a "severe issue", given the general issues with fee-prediction described in background 3,
its pretty hard to argue its really in the scope of the security model of lightning today. If there were an easy fix to
it, we'd have deployed it by now in response to private discussion, but, sadly, there is not.