Fee-Based Spam Prevention For Lightning

In an effort to address spam and inefficiency within the Lightning Network (LN), Jager and Teinturier initially proposed protocols involving Upfront Fees and Time-Dependent Reverse Hold Fees, designed to cover all significant routing costs. These approaches laid a foundational strategy for charging fees directly related to the services provided by nodes within the network, albeit with a noted vulnerability where routers could potentially misappropriate fees intended for others.

Building upon these initial proposals, enhancements have been introduced that incorporate secrets to confirm a payment's arrival at a given node and the integration of burn outputs as suggested by Riard and Naumenko. These additions aim to eliminate the risk of fee theft and foster cooperative behavior among nodes. By integrating these mechanisms, the revised protocols ensure that fees are securely allocated for all pertinent costs, thereby aiming to mitigate spam and bolster the LN's overall efficiency.

The refined protocols delineate three distinct types of fees: Upfront Fees, Hold Fees, and Success Fees. Upfront Fees are charged by the sender for each routing node to compensate for various operational costs associated with managing a Lightning payment. Hold Fees are imposed for delays in payment processing, compensating each upstream node for capital held during the delay and any inconvenience caused to the sender. Success Fees are rewarded to nodes that contribute to the successful completion of a payment, incentivizing effective and efficient payment processing.

Fee collection is innovatively structured around the inclusion of a burn output within Lightning channel transactions. This output, claimable by anyone after two decades, encourages cooperation through the assurance that funds will be irretrievably lost unless parties adhere to agreed-upon divisions. This method of fee allocation not only incentivizes collaboration but also deters malicious attempts to divert or steal fees.

Two protocols for calculating Upfront Fees are presented, differing primarily in their approach to maintaining privacy. The first utilizes hash preimages unique to each potential stopping node along a payment's route, whereas the second leverages discrete logarithms to preserve payment path confidentiality. Both methods enable precise fee distribution while offering varying degrees of privacy protection.

Moreover, the calculation of Hold Fees introduces a system where nodes stake maximum possible fees in anticipation of delays, with the actual fees determined based on the duration of any delay beyond a predefined grace period. This approach ensures fair compensation for delayed capital without directly penalizing nodes for delays outside their control.

The possibility of fund burning emerges under several circumstances, including protocol adherence failures and unilateral channel closures due to partner unresponsiveness. Strategies to minimize such outcomes include synchronization efforts, nonvolatile logging of critical transactions, and reliance on third-party transmission of key packets to distinguish between different failure modes.

Conclusively, the advanced protocols offer a comprehensive framework for fee assignment and collection within the LN, targeting the dual objectives of reducing spam and enhancing network performance. These developments represent significant progress towards a more secure, efficient, and cooperative Lightning Network ecosystem.