Using Per-Update Credential to enable Eltoo-Penalty

Summary:

The post discusses the use of Eltoo and its criticism in lowering the cost for a malicious party to test monitoring of the chain. Eltoo is a proposed improvement to the Lightning Network protocol that aims to make Bitcoin transactions more efficient by reducing the on-chain data required for multi-party payment channels. However, there are concerns about the security of Eltoo, as it may lower the cost for a malicious party to test monitoring of the chain. To address these concerns, the concept of transaction symmetry is introduced, which means we can't deduce from observing txid which party broadcast a previous state. To solve the assignment problem, per-update credentials are needed, a secret committed to a state number. The post talks about how to make Bitcoin Script aware of a secret committed to a lower state number using SIGHASH magic.A diagram of the Eltoo-Penalty Transaction Tree is provided along with various scripts. The post also explains different cases like Cooperative, Unilateral, and Malicious, where multiple parties are involved in closing transactions using key paths and balances, and what happens when one party tries to cheat. Different types of transactions such as Friendly Settlement Tx, Challenge Tx, Justice Tx, Litigation Tx, and Hostile Settlement Tx are explained in detail. These transactions are used to resolve disputes between parties in case of cheating or any other issues. The post delves into the technical details of how Eltoo works and addresses concerns about its security.On a mailing list, someone proposed an idea for implementing Eltoo + penalties, and asked if anyone had other ideas. The proposal was described as a thought experiment, and it was acknowledged that there may be flaws with the scheme. Script experts on the list were invited to provide feedback and critique. No further information was provided about the context or purpose of the proposed implementation.

Updated on: 2023-06-02T19:21:12.406072+00:00