[Lightning-dev] Hold fees: 402 Payment Required for Lightning itself

[Joost Jager]

Hello list,

Many discussions have taken place on this list on how to prevent undesired
use of the Lightning network. Spamming the network with HTLCs (for probing
purposes or otherwise) or holding HTLCs to incapacitate channels can be
done on today's network at very little cost to an attacker. So far this
doesn't seem to be happening in practice, but I believe that it is only a
matter of time before it will become a real issue.

Rate limits and other limits such as the maximum number of in-flight HTLCs
increase the cost of an attack, but may also limit the capabilities of
honest users. It works as a mitigation, but it doesn't seem to be the ideal
solution.

We've looked at all kinds of trustless payment schemes to keep users
honest, but it appears that none of them is satisfactory. Maybe it is even
theoretically impossible to create a scheme that is trustless and has all
the properties that we're looking for. (A proof of that would also be
useful information to have.)

Perhaps a small bit of trust isn't so bad. There is trust in Lightning
already. For example when you open a channel, you trust (or hope) that your
peer remains well connected, keeps charging reasonable fees, doesn't
force-close in a bad way, etc.

What I can see working is a system where peers charge each other a hold fee
for forwarded HTLCs based on the actual lock time (not the maximum lock
time) and the htlc value. This is just for the cost of holding and separate
from the routing fee that is earned when the payment settles.

This hold fee could be: lock_time * (fee_base + fee_rate * htlc_value).
fee_base is in there to compensate for the usage of an htlc slot, which is
a scarce resource too.

I think the implementation of this is less interesting at this stage, but
some ideas are:

A. Prepayment: node pays an amount to its channel peer (for example via
keysend) and the channel peer deducts the hold fees from that prepaid
balance until it is at zero. At that point it somehow (in the htlc fail
message?) communicates Lightning's version of http 402 to ask for more
money.

B. Tightly integrated with the htlc add/fail/settle messages. When an htlc
is added, the maximum cost (based on maximum lock time) for holding is
deducted from the sender's channel balance. When the htlc settles, a refund
is given based on the actual lock time. An additional `update_fee`-like
message is added for peers to update their hold fee parameters (fee_base
and fee_rate).

In both cases the sender needs to trust its peer to not steal the payment
and/or artificially delay the forwarding to inflate the hold fee. I think
that is acceptable given that there is a trust relation between peers
already anyway.

A crucial thing is that these hold fees don't need to be symmetric. A new
node for example that opens a channel to a well-known, established routing
node will be forced to pay a hold fee, but won't see any traffic coming in
anymore if it announces a hold fee itself. Nodes will need to build a
reputation before they're able to command hold fees. Similarly, routing
nodes that have a strong relation may decide to not charge hold fees to
each other at all.

This asymmetry is what is supposed to prevent channel jamming attacks. The
attacker needs to pay hold fees to send out the payment, but when it comes
back to the attacker after traversing a circular route, they won't be able
to charge a hold fee to cancel out the hold fee paid at the start of the
route. (Assuming the attacker node is not trusted.)

A consequence for honest users is that payment attempts are no longer free.
The cost should however be negligible for fast-failing attempts. Also
senders will have to be a lot more selective when building a route.
Selecting a 'black hole' hop (hop that doesn't forward nor fail) can be
costly.

The hold fee scheme is a bit looser compared to previously proposed schemes
(as far as I know...). It is purely an arrangement between channel peers
and doesn't try to exactly compensate every hop for its costs. Instead
trust relations that arguably exist already are leveraged to present a bill
to the actor who deserves it.

Interested to hear opinions about this proposal.

I'd also like to encourage everyone to prioritize this spam/jam issue and
dedicate more time to solving it. Obviously there is a lot more to do in
Lightning, but I am not sure if we can afford to wait for the real
adversaries to show up on this one.

Cheers,
Joost
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