Author: Dmitry Petukhov 2019-08-08 11:37:50
Published on: 2019-08-08T11:37:50+00:00
In a recent discussion on Bitcoin's mailing list, ZmnSCPxj raised concerns about the anti-snitch protection scheme in consolidated bonds. The current scheme of MuSig(all_except_snitch) won't work if there are two snitches. To address this issue, it is suggested to change the scheme to 1-of-n multisig construction where anyone other than the snitch can confiscate the bond. However, this may lead to a co-conspirator getting the bond before others. It is proposed to make a multitude of taproot leaves to protect from more than one snitch. Each leaf can be spent by cooperation of N entities, where N is the size of expected non-snitch participant set.The discussion also highlighted the possibility of aggregation by off-blockchain agreements, which could be an issue for the system. Centralized exchanges and custodial services already control TXOs of their customers, which they can use to create fidelity bonds out of these TXOs with or without consent of the customers. They can pay them the amount according to their UTXO while getting the consolidation benefit of V^2 for themselves. Moreover, such centralized services would be willing to participate in deanonymization efforts to explain their participation in coinjoins to regulators.
Updated on: 2023-06-13T20:28:37.650591+00:00