lightning-dev

Liquidity Ads: Updated Spec Posted, please review

Liquidity Ads: Updated Spec Posted, please review

Original Postby Bastien TEINTURIER

Posted on: November 22, 2023 17:13 UTC

The email from Bastien addresses a specific issue related to Replace-By-Fee (RBF) attempts in the context of transaction confirmations and liquidity allocation.

It is noted that if a seller decides to redirect their liquidity due to delays in transaction confirmation, they may have an incentive to reject RBF attempts. This could potentially lead them to wait for a chance to double-spend, which presents a strategic decision point for the seller: either ask for higher fees or withdraw their liquidity altogether.

Furthermore, Bastien suggests that it might be impossible to ensure that liquidity sellers always act honestly. An example given is the refusal to relay Hash Time-Locked Contracts (HTLCs), an action that cannot be easily detected or proven. The recommendation put forward is to focus on limiting exposure and creating strong incentives for proper behavior, rather than trying to create an overly complex protocol that might still fail to address all potential vulnerabilities. The underlying sentiment is one of pragmatic acceptance that no system can be made entirely foolproof, and that efforts should be directed towards practical solutions that encourage good conduct among participants.