Author: Clara Shikhelman 2023-05-08 20:46:08
Published on: 2023-05-08T20:46:08+00:00
The HTLC (Hashed Time-Locked Contract) endorsement scheme has a vulnerability where local reputation can be built up during periods of low routing fees, and then abused when fees are high. To address this issue, the scheme should aim for reputational transitivity between incoming traffic and outgoing traffic. The acquisition cost of local reputation should be equal to the maximum time-value damage that one can inflict on a routing node channel accessible from its local counterparty granting this high-level of reputation. The calculation for reputation is based on a moving window where Bob's total revenue in the latest time period is used to determine Alice's reputation from Bob's point of view. If routing fees spike, nodes may lose their reputation, but it would not work the other way around. In summary, the HTLC endorsement scheme needs to ensure reputational transitivity to prevent abuse during high-fee periods.
Updated on: 2023-06-03T12:53:25.770399+00:00