delvingbitcoin

Liquidity griefing in multi-party transaction protocols

Liquidity griefing in multi-party transaction protocols

Original Postby instagibbs

Posted on: December 8, 2023 15:13 UTC

The discussion revolves around the complexities associated with transaction fee rates and their implications for blockchain operations.

A particular concern is highlighted where an inflated transaction pays a lower fee rate than expected, potentially allowing it to be replaced by another transaction that offers the fee rate originally anticipated. This scenario underscores a significant issue, which is not the 25% increase in fee rate itself, but rather the disparity by a factor of 500 in package sizes that exacerbates the core problem.

The conversation then shifts to focus on the challenges posed by anti-DoS rule3 and its role in either alleviating or compounding the situation depending on whether a transaction gets evicted from the mempool. If eviction occurs, future transactions would be required to pay a higher minimum fee, thereby safeguarding the node. However, if a transaction remains within the mempool, one must contend with its total value. It is noted that while version 3 (v3) of the protocol does prevent pinning, there remains a vulnerability through witness inflation, which could be exploited by an attacker using a single descendant transaction. This form of attack could deplete a victim's funds by driving up fee costs without any expense to the attacker.

Furthermore, the possibility of conducting such attacks remains uncertain until they are effectively tested. To address these vulnerabilities, a proposal for a post-cluster mempool scheme is introduced. This proposed scheme suggests a relaxation of v3 requirements, wherein a transaction must only be in the top block to enter the mempool, thus making pinning significantly more difficult. The scheme aims to protect against witness inflation and facilitate Child Pays for Parent (CPFP) batching that is resistant to pinning. It also suggests that transactions may not require the absence of unconfirmed ancestors and posits safer ANYONECANPAY transactions, particularly for second-stage Hash Time-Locked Contracts (HTLCs).

Overall, the email outlines current issues with transaction fee rates and potential strategies for mitigating risk, emphasizing the need for further investigation and development of solutions to enhance security and efficiency in blockchain transaction processes.