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

[Christian Decker]

Jim Posen <jim.posen at gmail.com> writes:
> Can you explain why a fixed offset along the whole circuit is enough to
> ensure safely as opposed to an increased delta at each hop?

Sure. Let's assume we have chosen a path `A->B->C->D->E`. For simplicity
let's assume they all have a CLTV delta of 144 blocks (lnd's default
setting). Furthermore let's assume that the CSV timeout for the channels
is also 144.

This means that with the current LN-penalty mechanism you'd have the
following CLTV deltas in the HTLC:

```
A -(576)-> B -(432)-> C -(288)-> D -(144)-> E
```

Meaning that if the current time is approaching the absolute CLTV we
need initiate a channel closure to safely fetch the preimage on-chain,
and be able to turn around and send it on the upstream channel.

This is minimal, but can be arbitrarily higher, if you follow the best
practice of obfuscating the final destination by building a shadow route
behind the real recipient, and add it's CLTV deltas and fees to your
route.

With eltoo you'd need to make sure that you have the settlement
transaction confirmed before your desired CLTV timeout delta begins to
count down. So if the CLTV of the HTLC is `now + CSV timeout + CLTV
delta` you need to initiate a close, whereas Lightning allows you to
wait for time `now + CLTV delta`. Effectively this results in the
following time deltas:

```
A -(576+144)-> B -(432+144)-> C -(288+144)-> D -(144+144)-> E
```

Taking the last hop for example, if we had a CLTV of 1000 with eltoo
we'd need to start closing at height 712, instead of 856 with
LN-penalty. However, this increased delta does not accumulate along the
path, it's just a fixed offset. The longer the route, the smaller the
actual impact of this offset.