lightning-dev
On solving pinning, replacement cycling and mempool issues for bitcoin second-layers
Posted on: November 15, 2023 18:14 UTC
In addressing the challenges faced by Bitcoin Layer 2 solutions, particularly with respect to pinning and replacement cycling issues, several key properties and requirements have been identified as critical for any consensus-change based solution.
These include non-interactivity, minimization of fee-bumping reserves and locked UTXOs, and the ability to thwart malicious activities while remaining competitive with current fee rates. Solutions should not sacrifice the security of low-value lightning payments to local knowledge of historical mempool states and must be scalable to multi-party off-chain constructions involving more than two parties.
The ideal solution would also aim to reduce witness size through efficient Bitcoin script semantics and prevent miners, especially those with low hash rates, from manipulating fees to the disadvantage of Lightning or Layer 2 nodes. Additionally, it is crucial that the solution is compatible with responses to large-scale force-closure of time-sensitive off-chain states without exacerbating issues such as partial or global mempool partitioning.
There has been some exploration into creating solutions that eliminate package malleability using annex and sighash_anyamount semantics. However, further consideration of alternative approaches, such as Peter Todd's op_expire proposal and potentially innovative cryptographic methods involving short-lived proofs and strict sequential time windows, is warranted. Despite these efforts, there is a lack of comprehensive design, which necessitates an end-to-end implementation to test effectiveness, particularly in the context of the Lightning Network.
The need for further research by the Bitcoin community into matters of pinning, replacement cycling, and miner incentive misalignment with second-layer protocols is emphasized. This research is deemed essential for establishing a reliable fee market in a future where block rewards are no longer available and maintaining a sustainable, decentralized mining ecosystem over the long term. Although unconventional solutions like ordinal transactions may present temporary fixes, they introduce additional technical complexities that require attention.
For a comprehensive overview of the discussion around these issues, interested parties can refer to the original post on the Bitcoin development mailing list: Bitcoin-dev Mailing List.