Hi all, After the transaction recycling has spurred some discussion the last week or so, I figured it could be worth sharing some research I’ve done into HTLC output aggregation, as it could be relevant for how to avoid this problem in a future channel type.
TLDR; With the right covenant we can create HTLC outputs that are much more chain efficient, not prone to tx recycling and harder to jam. ## Transaction recycling The transaction recycling attack is made possible by the change made to HTLC second level transactions for the anchor channel type[8]; making it possible to add fees to the transaction by adding inputs without violating the signature. For the legacy channel type this attack was not possible, as all fees were taken from the HTLC outputs themselves, and had to be agreed upon by channel counterparties during signing (of course this has its own problems, which is why we wanted to change it). The idea of HTLC output aggregation is to collapse all HTLC outputs on the commitment to a single one. This has many benefits (that I’ll get to), one of them being the possibility to let the spender claim the portion of the output that they’re right to, deciding how much should go to fees. Note that this requires a covenant to be possible. ## A single HTLC output Today, every forwarded HTLC results in an output that needs to be manifested on the commitment transaction in order to claw back money in case of an uncooperative channel counterparty. This puts a limit on the number of active HTLCs (in order for the commitment transaction to not become too large) which makes it possible to jam the channel with small amounts of capital [1]. It also turns out that having this limit be large makes it expensive and complicated to sweep the outputs efficiently [2]. Instead of having new HTLC outputs manifest for each active forwarding, with covenants on the base layer one could create a single aggregated output on the commitment. The output amount being the sum of the active HTLCs (offered and received), alternatively one output for received and one for offered. When spending this output, you would only be entitled to the fraction of the amount corresponding to the HTLCs you know the preimage for (received), or that has timed out (offered). ## Impacts to transaction recycling Depending on the capabilities of the covenant available (e.g. restricting the number of inputs to the transaction) the transaction spending the aggregated HTLC output can be made self sustained: the spender will be able to claim what is theirs (preimage or timeout) and send it to whatever output they want, or to fees. The remainder will go back into a covenant restricted output with the leftover HTLCs. Note that this most likely requires Eltoo in order to not enable fee siphoning[7]. ## Impacts to slot jamming With the aggregated output being a reality, it changes the nature of “slot jamming” [1] significantly. While channel capacity must still be reserved for in-flight HTLCs, one no longer needs to allocate a commitment output for each up to some hardcoded limit. In today’s protocol this limit is 483, and I believe most implementations default to an even lower limit. This leads to channel jamming being quite inexpensive, as one can quickly fill a channel with small HTLCs, without needing a significant amount of capital to do so. The origins of the 483 slot limits is the worst case commitment size before getting into unstandard territory [3]. With an aggregated output this would no longer be the case, as adding HTLCs would no longer affect commitment size. Instead, the full on-chain footprint of an HTLC would be deferred until claim time. Does this mean one could lift, or even remove the limit for number of active HTLCs? Unfortunately, the obvious approach doesn’t seem to get rid of the problem entirely, but mitigates it quite a bit. ### Slot jamming attack scenario Consider the scenario where an attacker sends a large number of non-dust* HTLCs across a channel, and the channel parties enforce no limit on the number of active HTLCs. The number of payments would not affect the size of the commitment transaction at all, only the size of the witness that must be presented when claiming or timing out the HTLCs. This means that there is still a point at which chain fees get high enough for the HTLC to be uneconomical to claim. This is no different than in today’s spec, and such HTLCs will just be stranded on-chain until chain fees decrease, at which point there is a race between the success and timeout spends. There seems to be no way around this; if you want to claim an HTLC on-chain, you need to put the preimage on-chain. And when the HTLC first reaches you, you have no way of predicting the future chain fee. With a large number of uneconomical HTLCs in play, the total BTC exposure could still be very large, so you might want to limit this somewhat. * Note that as long as the sum of HTLCs exceeds the dust limit, one could manifest the output on the transaction. ## The good news With an aggregated HTLC output, the number of HTLCs would no longer impact the commitment transaction size while the channel is open and operational. The marginal cost of claiming an HTLC with a preimage on-chain would be much lower; no new inputs or outputs, only a linear increase in the witness size. With a covenant primitive available, the extra footprint of the timeout and success transactions would no longer exist. Claiming timed out HTLCs could still be made close to constant size (no preimage to present), so no additional on-chain cost with more HTLCs. ## The bad news The most obvious problem is that we would need a new covenant primitive on L1 (see below). However, I think it could be beneficial to start exploring these ideas now in order to guide the L1 effort towards something we could utilize to its fullest on L2. As mentioned, even with a functioning covenant, we don’t escape the fact that a preimage needs to go on-chain, pricing out HTLCs at certain fee rates. This is analogous to the dust exposure problem discussed in [6], and makes some sort of limit still required. ### Open question With PTLCs, could one create a compact proof showing that you know the preimage for m-of-n of the satoshis in the output? (some sort of threshold signature). If we could do this we would be able to remove the slot jamming issue entirely; any number of active PTLCs would not change the on-chain cost of claiming them. ## Covenant primitives A recursive covenant is needed to achieve this. Something like OP_CTV and OP_APO seems insufficient, since the number of ways the set of HTLCs could be claimed would cause combinatorial blowup in the number of possible spending transactions. Personally, I’ve found the simple yet powerful properties of OP_CHECKCONTRACTVERIFY [4] together with OP_CAT and amount inspection particularly interesting for the use case, but I’m certain many of the other proposals could achieve the same thing. More direct inspection like you get from a proposal like OP_TX[9] would also most likely have the building blocks needed. ### Proof-of-concept I’ve implemented a rough demo** of spending an HTLC output that pays to a script with OP_CHECKCONTRACTVERIFY to achieve this [5]. The idea is to commit to all active HTLCs in a merkle tree, and have the spender provide merkle proofs for the HTLCs to claim, claiming the sum into a new output. The remainder goes back into a new output with the claimed HTLCs removed from the merkle tree. An interesting trick one can do when creating the merkle tree, is sorting the HTLCs by expiry. This means that one in the timeout case claim a subtree of HTLCs using a single merkle proof (and RBF this batched timeout claim as more and more HTLCs expire) reducing the timeout case to constant size witness (or rather logarithmic in the total number of HTLCs). **Consider it an experiment, as it is missing a lot before it could be usable in any real commitment setting. [1] https://bitcoinops.org/en/topics/channel-jamming-attacks/#htlc-jamming-attack [2] https://github.com/lightning/bolts/issues/845 [3] https://github.com/lightning/bolts/blob/aad959a297ff66946effb165518143be15777dd6/02-peer-protocol.md#rationale-7 [4] https://lists.linuxfoundation.org/pipermail/bitcoin-dev/2022-November/021182.html [5] https://github.com/halseth/tapsim/blob/b07f29804cf32dce0168ab5bb40558cbb18f2e76/examples/matt/claimpool/script.txt [6] https://lists.linuxfoundation.org/pipermail/lightning-dev/2021-October/003257.html [7] https://github.com/lightning/bolts/issues/845#issuecomment-937736734 [8] https://github.com/lightning/bolts/blob/8a64c6a1cef979b3f0cecb00ba7a48c2d28b3588/03-transactions.md?plain=1#L333 [9] https://lists.linuxfoundation.org/pipermail/bitcoin-dev/2022-May/020450.html _______________________________________________ bitcoin-dev mailing list bitcoin-dev@lists.linuxfoundation.org https://lists.linuxfoundation.org/mailman/listinfo/bitcoin-dev
