Combined summary - Scaling Lightning Safely With Feerate-Dependent Timelocks
Developers have identified challenges in implementing feerate-dependent timelocks (FDTs) within the Bitcoin network, especially concerning pruned full nodes.
If a node unaware of FDTs prunes blocks, it lacks median feerate data crucial for validating post-upgrade transactions. Proposed solutions include having upgraded nodes enforce FDTs only when they have the necessary data and acquiring older blocks or relevant data through peer-to-peer protocol enhancements.
Consensus among developers suggests that FDTs rely on an aligned time window rather than the most recent one for improved security over chosen periods. Adjusting the window size can help balance latency with security needs. Storing FDT parameters in the bip341 annex could increase flexibility and efficiency.
An FDT requires transactions to satisfy both absolute/relative timelocks and median feerate conditions during a specific aligned window before inclusion in the blockchain. Rules mandate a set number of consecutive blocks, beginning no earlier than a predetermined time, with fewer than a certain number of blocks exceeding a specified median feerate value.
Incorporating a claim_grace_period has been discussed to address conflicts from competing transactions, which could enhance security by ensuring honest miners include correct transactions. The application of FDTs extends beyond HTLCs, offering potential security improvements for Lightning Network channels and factory states.
Fungible Defense Transactions aim to improve the security of time-sensitive transactions, guarding against dishonest mining and managing high congestion periods while maintaining off-chain integrity like the Lightning Network. These transactions also serve as preventative measures against double spend attempts without sacrificing capital efficiency.
FDTs balance deterrence of attackers with preserving user experience, emphasizing minimal implementation costs. Recent research correcting an error in the original Bitcoin whitepaper shows that the risk of successful double-spend attacks diminishes with each additional confirmation, highlighting the importance of confirmations for transaction security.
Further technical details and practical implementations of FDTs are available on GitHub, marking a significant advancement in cryptocurrency security and the digital currency ecosystem's integrity.