bitcoin-dev

On solving pinning, replacement cycling and mempool issues for bitcoin second-layers

On solving pinning, replacement cycling and mempool issues for bitcoin second-layers

Original Postby Antoine Riard

Posted on: November 15, 2023 18:14 UTC

In the pursuit of addressing critical issues pertaining to Bitcoin's Layer 2 solutions, several key considerations have been outlined to inform a consensus-change based resolution.

These include ensuring that any solution is non-interactive, requiring no active participation from an off-chain counterparty, and that it effectively minimizes both the reserve required for fee-bumping and the number of unspent transaction outputs (UTXOs) that remain locked. Additionally, the solution must be robust enough to prevent malicious pinning or replacement cycling, provided one can match the ongoing fee rates.

The security of low-value lightning payments should be independent of probabilistic knowledge of historical mempool states, and the solution should be applicable to multi-party off-chain constructions involving more than two parties. Efficiency is paramount, with an emphasis on minimizing witness size through optimized Bitcoin script semantics. It is also vital that the solution does not inadvertently provide advantages to miners with lower hash rates who may engage in manipulative fee games targeting Lightning nodes or other Layer 2 entities.

The proposed solution should be compatible with approaches that address the mass force-closure of time-sensitive off-chain states, while avoiding exacerbation of issues like partial or global mempool partitioning. Although there are preliminary thoughts on eliminating package malleability using existing mechanisms such as the annex and sighash_anyamount semantics, consideration is being given to alternative approaches rooted in advanced cryptography, including short-lived proofs and strictly enforced sequential time windows.

Despite the lack of a concrete design and the recognition of the complexity involved, there is a call for an end-to-end implementation to validate any proposed solution, specifically for its efficacy in relation to the Lightning Network. This appeal extends to the wider Bitcoin research community, emphasizing the need for additional investigation into pinning, replacement cycling, and the misalignment of miner incentives with second-layer solutions. The overarching goal remains to foster a reliable fee market post-mining subsidy and sustain a decentralized mining ecosystem for the long term, despite possible technical challenges introduced by solutions like ordinal transactions. Further real-world experimentation on the mainnet, conducted within ethical parameters, is encouraged to advance this endeavor.

For further insights into these discussions and considerations, reference to a comprehensive list of issues can be found at the following link: Bitcoin Development Mailing List Archive.