[bitcoin-dev] eltoo: A Simplified update Mechanism for Lightning and Off-Chain Contracts

[Christian Decker]

Jim Posen <jim.posen at gmail.com> writes:
> If my understanding is correct though, this construction would
> significantly increase the safe CLTV delta requirements because HTLCs
> cannot be timed out immediately on the settlement transaction. Consider a
> case where node B receives an HTLC from A and forwards to C. If the HTLC
> offered to C times out and C does not fail the HTLC off-chain, Lightning
> currently guarantees that the CLTV delta is sufficient that I may close the
> channel to C on-chain and claim the timed-out HTLC before my upstream HTLC
> to A times out. If the CLTV delta is too small, I may fail the upstream
> HTLC as soon as it times out, and then C may still claim the downstream
> HTLC with the preimage on-chain. With eltoo, when B closes the downstream
> channel on-chain, it must wait the CSV timeout on the update transaction
> before locking in the timed-out HTLC. This effectively means the CLTV delta
> has to be greater than the CSV timeout, plus some extra (whereas it is
> currently safe to make it significantly shorter). Is that true or am I
> missing something?

That's a good point Jim. We need to make sure that the CLTVs are far
enough in the future for the CSV timeout to expire and to grab any
preimage downstream and insert it upstream. Overall this results in an
offset of all the CLTVs to (less than) the maximum CSV timeout along the
path. This would be a fixed offset for each channel and can be announced
using the gossip protocol, so senders can take it into consideration
when computing the routes. Notice that this is not really the CLTV
delta, which would accumulate along the path, but an offset on which the
CLTV deltas build on.

In today's network we have many nodes that have a CLTV delta of 144
blocks, which quickly results in HTLC funds unavailable for several days
depending on the route length, so I don't think that adding a fixed
offset is much worse. Once we have watch-towers we can reduce both the
offset as well as the CLTV deltas. Since eltoo makes watch-towers less
expensive, given the reduced storage costs, I'd argue that it's a net
positive for the Lightning network (but then again I'm biased) :-)