V3 transaction policy for anti-pinning

V3 transaction policy for anti-pinning

Original Postby moonsettler

Posted on: January 8, 2024 10:39 UTC

In the realm of protocol and wallet development, there's a growing concern regarding the reliance on out-of-band (OOB) payments as a solution for mempool conflicts or timeouts.

Using such an API introduces significant risks, as it represents a single point of failure and substantially increases the potential for centralization within the system. This practice opens up the network to various types of pinning attacks, which can have complex implications that may not be immediately apparent.

One particular challenge arises in scenarios where a user attempts to settle a contract by adding additional fees through the use of an anchor transaction. The issue becomes pronounced when another user submits a transaction with higher fees that not only outbids the original transaction but also relies on unconfirmed ancestor transactions. These ancestors are vulnerable to double-spending attacks. If successfully executed, the attacker can cause both the fee bumps and the anchored transaction to be evicted from the mempools. Such events highlight the fragility and risks associated with depending on OOB payments and underscore the importance of creating more robust solutions that do not compromise the decentralized nature of the network.