[bitcoin-dev] CPFP Carve-Out for Fee-Prediction Issues in Contracting Applications (eg Lightning)

[Bob McElrath]

I've long thought about using SIGHASH_SINGLE, then either party can add inputs
to cover whatever fee they want on channel close and it doesn't have to be
pre-planned at setup.

For Lightning I think you'd want to cross-sign, e.g. Alice signs her input
and Bob's output, while Bob signs his input and Alice's output.  This would
demotivate the two parties from picking apart the transaction and broadcasting
one of the two SIGHASH_SINGLE's in a Lightning transaction.

Matt Corallo via bitcoin-dev [bitcoin-dev at lists.linuxfoundation.org] wrote:
> (cross-posted to both lists to make lightning-dev folks aware, please take
> lightning-dev off CC when responding).
> 
> As I'm sure everyone is aware, Lightning (and other similar systems) work by
> exchanging pre-signed transactions for future broadcast. Of course in many
> cases this requires either (a) predicting what the feerate required for
> timely confirmation will be at some (or, really, any) point in the future,
> or (b) utilizing CPFP and dependent transaction relay to allow parties to
> broadcast low-feerate transactions with children created at broadcast-time
> to increase the effective feerate. Ideally transactions could be constructed
> to allow for after-the-fact addition of inputs to increase fee without CPFP
> but it is not always possible to do so.
> 
> Option (a) is rather obviously intractible, and implementation complexity
> has led to channel failures in lightning in practice (as both sides must
> agree on a reasonable-in-the-future feerate). Option (b) is a much more
> natural choice (assuming some form of as-yet-unimplemented package relay on
> the P2P network) but is made difficult due to complexity around RBF/CPFP
> anti-DoS rules.
> 
> For example, if we take a simplified lightning design with pre-signed
> commitment transaction A with one 0-value anyone-can-spend output available
> for use as a CPFP output, a counterparty can prevent confirmation
> of/significantly increase the fee cost of confirming A by chaining a
> large-but-only-moderate-feerate transaction off of this anyone-can-spend
> output. This transaction, B, will have a large absolute fee while making the
> package (A, B) have a low-ish feerate, placing it solidly at the bottom of
> the mempool but without significant risk of it getting evicted during memory
> limiting. This large absolute fee forces a counterparty which wishes to have
> the commitment transaction confirm to increase on this absolute fee in order
> to meet RBF rules.
> 
> For this reason (and many other similar attacks utilizing the package size
> limits), in discussing the security model around CPFP, we've generally
> considered it too-difficulty-to-prevent third parties which are able to
> spend an output of a transaction from delaying its confirmation, at least
> until/unless the prevailing feerates decline and some of the mempool backlog
> gets confirmed.
> 
> You'll note, however, that this attack doesn't have to be permanent to work
> - Lightning's (and other contracting/payment channel systems') security
> model assumes the ability to get such commitment transactions confirmed in a
> timely manner, as otherwise HTLCs may time out and counterparties can claim
> the timeout-refund before we can claim the HTLC using the hash-preimage.
> 
> To partially-address the CPFP security model considerations, a next step
> might involve tweaking Lightning's commitment transaction to have two
> small-value outputs which are immediately spendable, one by each channel
> participant, allowing them to chain children off without allowng unrelated
> third-parties to chain children. Obviously this does not address the
> specific attack so we need a small tweak to the anti-DoS CPFP rules in
> Bitcoin Core/BIP 125:
> 
> The last transaction which is added to a package of dependent transactions
> in the mempool must:
>  * Have no more than one unconfirmed parent,
>  * Be of size no greater than 1K in virtual size.
> (for implementation sanity, this would effectively reduce all mempool
> package size limits by 1 1K-virtual-size transaction, and the last would be
> "allowed to violate the limits" as long as it meets the above criteria).
> 
> For contracting applications like lightning, this means that as long as the
> transaction we wish to confirm (in this case the commitment transaction)
>  * Has only two immediately-spendable (ie non-CSV) outputs,
>  * where each immediately-spendable output is only spendable by one
> counterparty,
>  * and is no larger than MAX_PACKAGE_VIRTUAL_SIZE - 1001 Vsize,
> each counterparty will always be able to independantly CPFP the transaction
> in question. ie because if the "malicious" (ie transaction-delaying) party
> bradcasts A with a child, it can never meet the "last transaction" carve-out
> as its transaction cannot both meet the package limit and have only one
> unconfirmed ancestor. Thus, the non-delaying counterparty can always
> independently add its own CPFP transaction, increasing the (A, Tx2) package
> feerate and confirming A without having to concern themselves with the (A,
> Tx1) package.
> 
> As an alternative proposal, at various points there have been discussions
> around solving the "RBF-pinning" problem by allowing transactors to mark
> their transactions as "likely-to-be-RBF'ed", which could enable a relay
> policy where children of such transactions would be rejected unless the
> resulting package would be "near the top of the mempool". This would
> theoretically imply such attacks are not possible to pull off consistently,
> as any "transaction-delaying" channel participant will have to place the
> package containing A at an effective feerate which makes confirmation to
> occur soon with some likelihood. It is, however, possible to pull off this
> attack with low probability in case of feerate spikes right after broadcast.
> 
> Note that this clearly relies on some form of package relay, which comes
> with its own challenges, but I'll start a separate thread on that.
> 
> See-also: lightning-dev thread about the changes to lightning spec required
> to incorporate this: https://lists.linuxfoundation.org/pipermail/lightning-dev/2018-November/001643.html
> 
> Matt
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--
Cheers, Bob McElrath

"For every complex problem, there is a solution that is simple, neat, and wrong."
    -- H. L. Mencken