Yep this is a good example construction. I'd also point out that modulo a privacy improvement, you can also script it as something like:

IF   IF <T> CLTV B DROP CHECKSIG ELSE <T2> CLTV DROP A CHECKSIG ENDIF ELSE 2 A B 2 CHECKMULTI ENDIF

This way you equivalently have cooperative closing / early closing positions, but you make the redeem script non-interactive to setup which enable someone to pay into one of these contracts without doing pre-signeds. This is unfortunate for privacy as the script is then visible, but in a taproot world it's fine.

Of course the non interactivity goes away if you want non-binary outcomes (e.g., Alice gets 1.5 Coin and Bob gets .5 Coin in case A, Bob gets 1.5 Coin Alice gets .5 coin in Case B).

And it's also possible to mix relative and absolute time locks for some added fun behavior (e.g., you win if > Time and > Blocks)


A while back I put together some python code which handles these embedded in basic channels between two parties (no routing). This enables you to high-frequency update and model a hashrate perpetual swap, assuming your counterparty is online.


The general issue with this construction family is that the contracts are metastable. E.g., if you're targeting a 100 block deficit , that means you have 100 blocks of time to claim the funds before either party can win. So there's some minimum times and hashrate moves to play with, and the less "clearly correct" you were, the less clearly correct the execution will be. This makes the channel version of the contract compelling as you can update and revoke frequently on further out contracts.


--
@JeremyRubin


On Sat, Aug 22, 2020 at 9:47 AM David A. Harding via bitcoin-dev <bitcoin-dev@lists.linuxfoundation.org> wrote:
On Sun, Aug 16, 2020 at 11:41:30AM -0400, Thomas Hartman via bitcoin-dev wrote:
> First, I would like to pay respects to tamas blummer, RIP.
>
> https://bitcoinmagazine.com/articles/remembering-tamas-blummer-pioneering-bitcoin-developer

RIP, Tamas.

> Tamas proposed an additional opcode for enabling bitcoin difficulty
> futures, on this list at
>
> https://www.mail-archive.com/bitcoin-dev@lists.linuxfoundation.org/msg07991.html

Subsequent to Blummer's post, I heard from Jeremy Rubin about a
scheme[1] that allows difficulty futures without requiring any changes
to Bitcoin.  In short, it takes advantage of the fact that changes in
difficulty also cause a difference in maturation time between timelocks
and height-locks.  As an simple example:

1. Alice and Bob create an unsigned transaction that deposits their
   money into a 2-of-2 multisig.

2. They cooperate to create and sign two conflicting spends from the multisig:

    a. Pays Alice with an nLockTime(height) of CURRENT_HEIGHT + 2016 blocks

    b. Pays Bob with an nLockTime(time) of CURRENT_TIME + 2016 * 10 * 60 seconds

3. After both conflicting spends are signed, Alice and Bob sign and
   broadcast the deposit transaction from #1.

4. If hashrate increases during the subsequent period, the spend that
   pays Alice will mature first, so she broadcasts it and receives that
   money.  If hashrate decreases, the spend to Bob matures first, so he
   receives the money.

Of course, this basic formula can be tweaked to create other contracts,
e.g. a contract that only pays if hashrate goes down more than 25%.

As far as I can tell, this method should be compatible with offchain
commitments (e.g. payments within channels) and could be embedded in a
taproot commitment using OP_CLTV or OP_CSV instead of nLockTime.

-Dave

[1] https://powswap.com/
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