[Lightning-dev] Locking of funds by both parties in HTLC to enforce penalty

Subhra Mazumdar subhra.mazumdar1993 at gmail.com
Fri Mar 6 05:58:36 UTC 2020

      I was reading the paper by Poon and Dryja on Bitcoin Lightning
Network and was going through the construction of HTLC. Suppose 2 parties A
and B have a channel with each party locking 0.5 BTC. Suppose A wants to
transfer 0.1 BTC to B contingent to the knowledge of R : H=h(R) produced
within a locktime of say t days. So the script output for A is -
1. 0.4 BTC to A
2. 0.5 BTC to B
3. 0.1 BTC locked in HTLC between A & B.
Why we cannot set the terms as say 0.4 BTC to A, 0.2 BTC to B and 0.4 BTC
to HTLC, where HTLC output can follow either of the paths - If B produces R
within t days then it gets back 0.4 BTC else after t days A can broadcast
with 0.4 BTC going to the A? This prevents B from not responding (and
induce possibly griefing attack across a longer path by withholding the
solution) since it will lose out 0.3 BTC. What can be the problem if the
terms of HTLC itself tries to enforce a penalty on the counterparty?

Yours sincerely,
Subhra Mazumdar.
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