Paper 2022/814

Suborn Channels: Incentives Against Timelock Bribes

Zeta Avarikioti, TU Wien
Orfeas Stefanos Thyfronitis Litos, Technical University of Darmstadt
Abstract

As the Bitcoin mining landscape becomes more competitive, analyzing potential attacks under the assumption of rational miners becomes increasingly relevant. In the rational setting, blockchain users can bribe miners to reap an unfair benefit. Established protocols such as Duplex Micropayment Channels and Lightning Channels are susceptible to bribery, which upends their financial guarantees. Indeed, we prove that in a two-party contract in which the honest party can spend an output right away, whereas the malicious can only spend the same output after a timelock, the latter party can promise a high fee to the miners, who then intentionally ignore the transaction of the honest party in anticipation of the higher fee. This effectively prevents a valid transaction from ever entering the blockchain, resulting in potentially severe financial losses for the honest and considerable gains for the malicious party. We expand previous results on timelock bribes to more realistic blockchains, proving that a general class of contracts are susceptible. We then apply our results to Duplex Micropayment Channels and Lightning Channels, providing exact bounds on their safe operating region. Furthermore, we enhance the Bitcoin Script of Duplex Micropayment Channels so that the coins of a party that attempts to bribe are given to the miners as fees, therefore effectively disincentivizing bribes. Our solution, named Suborn channels, is implemented as a proof-of-concept. We also propose a small change to Lightning Channels that achieves a similar effect. Moreover, we formally express the exact circumstances under which our two proposals ensure alignment of miner incentives with the prescribed protocol outcome.

Metadata
Available format(s)
PDF
Category
Cryptographic protocols
Publication info
Published elsewhere. Financial Cryptography and Data Security
Keywords
Bitcoin Security Layer 2 Payment channels Lightning network Incentives Bribing
Contact author(s)
georgia avarikioti @ tuwien ac at
orfeas thyfronitis @ tu-darmstadt de
History
2022-06-23: approved
2022-06-22: received
See all versions
Short URL
https://ia.cr/2022/814
License
Creative Commons Attribution
CC BY

BibTeX

@misc{cryptoeprint:2022/814,
      author = {Zeta Avarikioti and Orfeas Stefanos Thyfronitis Litos},
      title = {Suborn Channels:  Incentives Against Timelock Bribes},
      howpublished = {Cryptology ePrint Archive, Paper 2022/814},
      year = {2022},
      note = {\url{https://eprint.iacr.org/2022/814}},
      url = {https://eprint.iacr.org/2022/814}
}
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