[bitcoin-dev] One-Shot Replace-By-Fee-Rate \ stacker news ~bitcoin

[bitcoin-dev] One-Shot Replace-By-Fee-Rate @ 2024-01-18 18:23 Peter Todd 2024-01-22 18:12 ` Murch 0 siblings, 1 reply; 8+ messages in thread From: Peter Todd @ 2024-01-18 18:23 UTC (permalink / raw) To: bitcoin-dev

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Reposting this blog post here for discussion:

https://petertodd.org/2024/one-shot-replace-by-fee-rate

layout: post title: "One-Shot Replace-by-Fee-Rate" date: 2024-01-18 tags:

bitcoin
rbf
pinning

Currently Bitcoin Core implements a Replace-by-Fee (RBF) policy, where transactions are not replaced unless the new transaction pays at least a higher total fee than the replaced transaction, regardless of fee-rate.

When RBF was first implemented over 8 years ago this was a reasonable, conservative, default. However, since then we've found that strictly requiring a higher absolute fee creates the potential for transaction pinning attacks in contracting protocols such as Lightning; replacing transactions based on fee-rate would make it possible¹ to eliminate these attacks by eliminating BIP-125 Rule #3 pinning.

Here we will propose an incentive compatible solution, One-Shot Replace-By-Fee-Rate, that mitigates prior concerns over replace-by-fee-rate policies by allowing the replacement to only happen when it would immediately bring a transaction close enough to the top of the mempool to be mined in the next block or so. Finally, we will show that both one-shot and pure replace-by-fee-rate policies sufficiently resist bandwidth exhaustion attacks to be implementable.

Thanks goes to Fulgur Ventures for sponsoring this research. They had no editorial control over the contents of this post and did not review it prior to publication.

Background

The Expected Return of an Unconfirmed Transaction

Suppose there exists a transaction that pays a fee of

F

at a fee-rate

r

. What is the expected return

E

of that transaction to miners as a whole? If the transaction pays a fee-rate high enough to definitely get mined in the next block, the answer seems obvious:

E = F

. The transaction will be mined, and miners as a whole will earn the entire

F

fee.

But what if that transaction pays a lower fee-rate? For example, as I write this, mempool.space reports that their mempool contains

535\mathrm{MvB}

of transactions, enough that a typical Bitcoin Core node with its typical

300\mathrm{MB}

mempool size limit would reject transactions paying less than

22.9\frac{\mathrm{sat}}{\mathrm{vB}}

If a transaction has a fee-rate of

23\frac{\mathrm{sat}}{\mathrm{vB}}

, just barely enough to get into a default mempool, what is that transaction worth to miners? How do we even answer this question?

Intuitively it seems obvious that the low fee-rate transaction should be worth less than the high fee-rate transaction, because the low fee-rate transaction probably won't be mined for days, or even weeks, if ever. Certainly, in a shorter time frame, a transaction at the bottom of the mempool does not directly represent income to the miner.

We can think about this a bit more rigorously by observing that because block finding is a Poisson Process, even if we ignore the supply of new transactions, the probability that a transaction

n

blocks deep is mined in a time interval

t

is the probability that

N \ge n

blocks are found in the time interval

t

. That probability rapidly diminishes as

n

increases, because it's less and less likely for so many blocks to be found in a short period of time.

Unconfirmed Transactions are Honest Signals

Do low fee-rate transactions have a value? Yes!

Assuming your node is well connected, unconfirmed transactions in your mempool are honest signals: because unconfirmed transactions could be mined, they're clear evidence that if you wish your transaction to be mined sooner, you need to offer an even higher fee-rate. There's a constant supply of people with high time preference who want their transactions mined in a short period of time. So low fee-rate transactions indirectly increase the revenue of miners in the short term, because they force higher time preference transactors to outbid them.

Note how I said a higher fee-rate, not fee: because it maximizes revenue to mine transactions in fee-rate order, fee-rate is what matters in terms of priority.

Expected Return vs Fee-Rate

Suppose we now have two different conflicting transactions,

a

and

b

. Suppose that the total size of

a

100000\mathrm{vB}

, and pays

23\frac{\mathrm{sat}}{\mathrm{vB}}

, for a total fee of

2300000\mathrm{sat}

. Meanwhile

b

has a size of just

150\mathrm{vB}

, and pays

15000\frac{\mathrm{sat}}{\mathrm{vB}}

, for a total fee of

2250000\mathrm{sat}

It seems intuitive that transaction

b

is the one the miner should accept to maximize revenue. It pays a far higher fee-rate, almost certainly high enough to be mined in the next block.

a

might never get mined, in part because another miner might mine

b

first². Yet currently, Bitcoin Core will reject

b

, because BIP-125 Rule #3 requires a transaction to pay a higher total fees than the replacement!

Conversely if transaction

b

was broadcast first, transaction

a

would not be accepted even though it pays a higher total fee: Bitcoin Core does not allow a transaction to be replaced unless the replacement pays a higher fee-rate.

One-Shot Replace-by-Fee-Rate

We can mitigate Rule #3 transaction pinning in a miner-incentive compatible way by replacing transactions (or alternatively, transaction packages) that do not qualify for replacement based on the existing rules, if they qualify under these alternative rules:

The new transaction (package) has a fee-rate more than $r$ times higher than the fee-rate of the transactions it replaces.
The new transaction (package) has a sufficiently high fee-rate to place it into the upper $N$ blocks worth of the mempool.
The highest mineable replaced fee-rate is not high enough to place the replaced transactions in the upper $N$ blocks of the mempool. Highest mineable replaced fee-rate in this context refers to the fee-rate a miner can obtain by mining one or more of the replaced transactions, taking unconfirmed parents³ into account.

Setting

r = 1.25

and

N = 1

would be reasonable.

Provided that a small

N

is chosen, this alternative Replace-by-Fee-Rate mechanism solves BIP-125 Rule #3 transaction pinning for contracting protocols such as Lightning because:

If the one-shot RBFr replacement conditions are met, the higher fee-rate intended transaction replaces the pin, and will be mined in the near future.
If the replacement conditions are not met, the pin must already have a sufficiently high fee-rate to be mined "soon", allowing the protocol to make forward progress anyway.

This works because contracting protocols are not secure if they absolutely depend on the highest fee/fee-rate transaction being mined. Mempools don't have consensus, so it's impossible to guarantee that a particular transaction gets mined when more than one transaction is possible. But, contracting protocols do require forward progress to be made, defined as transactions getting mined. So as long as we can ensure that a transaction is mined, the protocol can make progress.

For miners, these one-shot RBFr rules are reasonably incentive compatible because:

In the typical case where fees are reasonably steady, there is a constant supply of new transactions created by people who want those transactions to be mined in the near future.
The old transaction did not have a high enough fee-rate to be mined soon. Thus the value to the miner of that transaction was not the fees themselves. But rather, the fee-rate, which new, high time preference, bidders have to outbid.
The new transaction does have a high enough fee-rate to be mined soon. Which means other high time preference transactors will have to outbid it, or alternatively, the transactions it pushed further down the mempool.
Contracting protocols, in particular Lightning-like protocols, are profitable to miners because they allow many layer 2 transactions to pay for the transaction fees of a single layer 1 transaction. Adopting rules that allow these protocols to work better will, in the long run, increase miner revenue.
It is sufficient for only a subset of miners to run replace-by-fee-rate policies, as well-designed contracting protocols only need to make forward progress eventually, prior to deadlines being reached.

Remember that we are not claiming that one-shot RBFr is always perfectly incentive compatible; no one set of rules could ever be perfectly incentive compatible in all possible scenarios. We are simply claiming that on average, in the situations where these rules are active, miners make more money.

Finally node runners should adopt these rules because:

If we assume node runners are donating their bandwidth to be used for the good of Bitcoin users and miners, all the above arguments apply.
These rules are usually a strict increase in the number of transactions that nodes propagate to miners; replace-by-fee-rate policies propagate transactions that otherwise would not have been propagated.

Denial of Service Attacks

The Status Quo

The amount of bandwidth transactors can consume by broadcasting Bitcoin transactions must be limited. But even without transaction replacement, the exact way these limits work is non-obvious.

You might think that the minimum relay fee implements a direct cost that must be paid to use up bandwidth, if you assume that any transaction will eventually be mined. But in fact this is not true! There are a variety of ways that a previously broadcast transaction might become impossible to mine due to a double spend of one of the inputs, by a transaction that did not pay the full cost of the minimum relay fee for that transaction.

For example, an attacker could broadcast a large,

400{\small,}000\mathrm{byte}

, low fee-rate transaction that violates Ocean mining pool's restrictions on data carrying transactions. Almost all relay nodes will relay this transaction, using up relay bandwidth. But at some point in the future, the attacker can give Ocean a much smaller transaction spending one of that large, low fee-rate, transaction's inputs. It will eventually be mined, creating a conflict that invalidates the large transaction, at a much lower cost than the total fees the large transaction was supposed to pay.

Similarly, an attacker could broadcast a large, low fee-rate, transaction while simultaneously sending a small double-spend directly to a mining pool. With good timing, the super-majority of nodes will waste bandwidth broadcasting the large transaction, which is eventually removed from mempools when the small transaction is mined at low cost.

How much is such an attacker paying? Interestingly, the worst case is made a bit worse worse if the ephemeral anchors proposal is implemented. So for the purpose of conservatively analyzing a worst case situation, we will assume the attacker makes use of the most efficient possible version of ephemeral anchors, a bare scriptPubKey spent by an OP_True. If ephemeral anchors is not implemented, all of the steps below can be done nearly as efficiently via P2SH outputs with the spending script OP_True.

Attacker creates $N$ ephemeral anchor outputs.⁴
Attacker broadcasts $N$ , $404{\small,}000\mathrm{byte}$ transaction packages⁵ with fee-rate low enough to not be mined any time soon, in such a way that the transactions is not accepted by some hash power. Each transaction spends an ephemeral anchor output.
Attacker spends those $N$ ephemeral anchor outputs in a transaction paying market fee-rates rates.

Spending each ephemeral output requires an additional

41\mathrm{vB}

per output spent, and creating an ephemeral output, an additional

9\mathrm{vB}

. Thus the attacker has broadcast

404{\small,}000\mathrm{bytes}

while paying for just

50\mathrm{vB}

, a

\frac{1}{8080}

cost reduction⁶ over the intended minimum relay fee.

Remember, we are not analyzing replace-by-fee-rate here! We're just looking at what is already possible with Bitcoin Core. Or at least, almost already possible, as OP_True P2SH outputs cost only a bit more.

So why isn't this attack happening? Let's work out how much it costs, using the current Bitcoin price and current lower-bound mining fees:

\frac{50\mathrm{vB}}{404{\small,}000\mathrm{B}} \times \frac{30\mathrm{sat}}{\mathrm{vB}} \times \frac{40{\small,}000 \mathrm{USD}}{100{\small,}000{\small,}000\mathrm{sats}} \approx \frac{1485 \mathrm{USD}}{\mathrm{GB}}

Even Digital Ocean charges just

0.01\frac{\mathrm{USD}}{\mathrm{GB}}

⁷. So if you wanted to DoS attack all ~20,000 publicly reachable nodes, you'd be spending only

200\frac{\mathrm{USD}}{\mathrm{GB}}

. This isn't an entirely fair comparison, as relaying transactions also uses up bandwidth on non-public nodes. But it is an indication that there are probably cheaper and more effective ways to attack Bitcoin.

Conflicting Versions

Attackers can further multiply the bandwidth usage of their attack by simultaneously broadcasting multiple conflicting versions of the large transaction to different nodes, where each conflict pays the same fee/fee-rate. At the points in the node network graph where the conflicts "meet", nodes will end up downloading multiple versions from their peers, again increasing bandwidth usage by the number of conflicts each node sees.

Analyzing this case is more difficult, as the impact depends on network topology, and the attacker has to use more of their own bandwidth broadcasting the conflicting transactions. But in a perfectly executed attack, a node might receive one conflicting version per peer; public nodes have, by default, up to 125 connections, and non-public nodes have, by default, 8 outgoing transaction relaying peers.

Even in the 125x public node case it would probably be cheaper to try to DoS attack all publicly accessible nodes via an unsophisticated packet flood.

Re-using Third Party Outputs

An attacker can make use of others' transactions rather than creating their own transaction outputs to reduce cost. This of course is a transaction pinning attack! Doing this is possible against unsigned anchor outputs, as well as transactions signed with SIGHASH_ANYONECANPAY. However for the purpose of using up relay bandwidth this attack strategy is inherently limited by two factors:

There usually aren't that many suitable victim transactions being broadcast, limiting the total bandwidth that can be consumed.
The attacker has to intercept the victim transactions prior to them being widely broadcast, and somehow get their "bloated" versions of those transactions widely broadcast first.

Fill and Dump Attack

In addition to using up bandwidth an attacker could also use transaction invalidation to fill, and then empty, mempools at less cost than the full fees required to broadcast the "fill" transactions. In fact, any attack that tries to use up a significant amount of relay bandwidth by mining conflicting transactions will have this effect by default, as conflicts can only invalidate transactions when blocks are mined.

Filling mempools requires access to large amounts of capital. Bitcoin Core implements the mempool size limit in terms of RAM usage, not serialized bytes, so exactly what the default

300\mathrm{MB}

limit means depends on CPU architecture. But for sake of argument, let's say that the limit works out to approximately

75\mathrm{MvB}

worth of transactions, and the attacker is "filling"

70\mathrm{MvB}

worth, to avoid getting their transactions actually mined. Even at

10\frac{\mathrm{sat}}{\mathrm{vB}}

the attacker needs:

70\mathrm{MvB} \times \frac{10\mathrm{sat}}{\mathrm{vB}} \times \frac{40{\small,}000 \mathrm{USD}}{100{\small,}000{\small,}000\mathrm{sats}} = 280{\small,}000 \mathrm{USD}

An obvious question is, what exactly does this attack accomplish? Transactions that are outbid can simply be rebroadcast by anyone once mempools have space again; while the transactions are in mempools the attacker is legitimately outbidding those transactions, and they could hypothetically be mined. Arguably the transactions are driving up fees overall. But unless the attacker wants to bid high enough that their "fill" transactions actually get mined, the attacker isn't having any direct impact on the higher fee part of mempools that is actually getting mined.

Is One Shot Replace-By-Fee-Rate Similar To The Status Quo?

Yes.

As we have shown above, an attacker can already broadcast large transactions that are invalidated by smaller transactions that pay less total fees. With one-shot replace-by-fee-rate the attack becomes a little less challenging to pull off, as it can be done generically, rather than with a target mining pool. But either way, the real limiting factor to the attack is that it is still a very expensive way to use up bandwidth.

With regard to the fill-and-dump attack, again the attacker is able to do fill-and-dump cycles more frequently than once per block with one-shot replace-by-fee-rate. But again, we have to ask what does the attacker get out of this other than bandwidth consumption, and possibly confusing some badly written fee estimation code?

Pure Replace-By-Fee-Rate

What if we don't have the one-shot condition? Is a pure replace-by-fee-rate policy viable from a DoS attack perspective? This is an important question because:

An initial prototype is easier to implement without the one-shot feature, and compatible with nodes/miners who choose to do something more sophisticated.
Pure replace-by-fee-rate is simpler for users to understand.
In a rising fee-rate environment, the one-shot policy may degrade to pure replace-by-fee-rate.

Provided that the minimum fee-rate ratio,

r

is sufficiently high the total number of plausible replacements is limited. For example, even starting at just

1\frac{\mathrm{sat}}{\mathrm{vB}}

r = 1.25

results in:

1\frac{\mathrm{sat}}{\mathrm{vB}} \times 1.25^{30} \approx 808\frac{\mathrm{sat}}{\mathrm{vB}}

That's sufficient to get into the next block at any point in time in Bitcoin's history, for a mere 30x theoretical increase in bandwidth, by an attacker who is going to have to tie up thousands of dollars worth of BTC just to broadcast a few megabytes worth of transactions. And that example is unrealistic, as minimum relay fees were never actually that low during Bitcoin's high fee events.

It's probably worth trying out pure replace-by-fee-rate in a Bitcoin Core fork, especially if

r

is set to a more conservative value, e.g.

r=2

Impact on Coinjoins

Replace-by-fee-rate does introduce a new way to double-spend low fee-rate coinjoin transactions at lower cost than outbidding the entire fee paid by the coinjoin. This is most relevant to Wasabi, which typically creates coinjoin transactions with hundreds of inputs and outputs; other coinjoin implementations create much smaller transactions.

However, double-spending is not a new attack. There are already other cheap ways to cause coin-join rounds to fail, including other types of double-spend attacks, and cheapest of all, simply failing to complete the coinjoin protocol by failing to provide a signature where required. Wasabi deals with this by imposing a cost on the attacker, by blacklisting UTXO's that fail to complete a coinjoin round for a period of time; the majority of Wasabi coinjoin rounds fail due to one of the parties failing to sign in time.

Simply failing to sign is generally a cheaper attack than double-spending, as any type of double-spend requires fees to be paid per round disrupted. Thus replace-by-fee-rate is unlikely to pose a significant threat to coinjoin protocols.

Footnotes

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Re: [bitcoin-dev] One-Shot Replace-By-Fee-Rate 2024-01-18 18:23 [bitcoin-dev] One-Shot Replace-By-Fee-Rate Peter Todd @ 2024-01-22 18:12 Murch 2024-01-22 22:52 Peter Todd 2024-01-27 7:19 ` Peter Todd 0 siblings, 2 replies; 8+ messages in thread From: Murch @ 2024-01-22 18:12 UTC (permalink / raw) To: Peter Todd via bitcoin-dev

Hi Peter,

On 1/18/24 13:23, Peter Todd via bitcoin-dev wrote:

Reposting this blog post here for discussion:

https://petertodd.org/2024/one-shot-replace-by-fee-rate

I saw your proposal mentioned on Stacker News and read it with interest. In response, I described a replacement cycle that can be used to broadcast the same five transactions repeatedly:

#393182

The gist is that by using two confirmed inputs and five transactions, you can use RBFr to reduce the absolute fee while raising the feerate to top block levels, then immediately use the current RBF rules to introduce a high-feerate transaction that beats the RBFr transaction but is hampered by a low-feerate parent and not attractive for mining, then use RBF to replace its low-feerate parent, then use the RBFr transaction again to reduce the absolute feerate. Due to the asymmetric replacements, the same transactions can replace each other in that order in every cycle. Please refer to the linked write-up for details, I’ve included weights, fees, and a transaction graph to make my example comprehensible.

Among those five transactions, the only transaction attractive for block inclusion would be the small RBFr transaction with a bottom-of-the-next-block feerate. Today, if it were mined it would amount to fees of around 4000 sats every few blocks to make the entire network relay transactions of more than 205,000 vB every few seconds. Given that my example is minimal, it should be possible to further increase bandwidth cost.

Assuming that I did not make a mistake, i.e. all the replacements are viable and my scenario is compatible with your proposal, the described One-Shot Replace-By-Fee-Rate proposal would not be safe for deployment on the network.

Best, Murch

^ permalink raw reply [flat|nested] 8+ messages in thread

Re: [bitcoin-dev] One-Shot Replace-By-Fee-Rate 2024-01-22 18:12 Murch @ 2024-01-22 22:52 Peter Todd 2024-01-24 4:44 Peter Todd 2024-01-25 21:25 Murch 2024-01-27 7:19 ` Peter Todd 1 sibling, 2 replies; 8+ messages in thread From: Peter Todd @ 2024-01-22 22:52 UTC (permalink / raw) To: Murch, Bitcoin Protocol Discussion

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On Mon, Jan 22, 2024 at 01:12:45PM -0500, Murch via bitcoin-dev wrote:

Hi Peter,

On 1/18/24 13:23, Peter Todd via bitcoin-dev wrote:

Reposting this blog post here for discussion:

https://petertodd.org/2024/one-shot-replace-by-fee-rate

I saw your proposal mentioned on Stacker News and read it with interest. In response, I described a replacement cycle that can be used to broadcast the same five transactions repeatedly:

#393182

So if this does in fact work - I haven't actually tested it - the root problem here is not replace-by-fee-rate, but rather our current replace-by-fee rules: in step 7 you've clearly replaced a more desirable, high fee-rate, transaction that will be mined soon with a low fee-rate transaction that will not be. That's obviously not incentive compatible for miners, for the same reason that replace-by-fee-rate generally is incentive compatible.

I had incorrectly thought we had gotten rid of those cases... But looks like the definition of BIP-125 Rule #2, "The replacement transaction may only include an unconfirmed input if that input was included in one of the original transactions.", is not sufficient because you can combine unconfirmed inputs from two different replaced transactions, making a resulting transaction that is less valuable to miners than one of the replaced transactions.

IIUC Suhas has a draft fix here that would solve this issue: https://github.com/bitcoin/bitcoin/pull/26451

An even simpler fix would be to just require that all unconfirmed inputs in a replacement come from the same replaced transaction. That would make certain rare, but economically viable, replacements infeasible. But it would definitely fix the issue.

The gist is that by using two confirmed inputs and five transactions, you can use RBFr to reduce the absolute fee while raising the feerate to top block levels, then immediately use the current RBF rules to introduce a high-feerate transaction that beats the RBFr transaction but is hampered by a low-feerate parent and not attractive for mining, then use RBF to replace its low-feerate parent, then use the RBFr transaction again to reduce the absolute feerate. Due to the asymmetric replacements, the same transactions can replace each other in that order in every cycle. Please refer to the linked write-up for details, I’ve included weights, fees, and a transaction graph to make my example comprehensible.

BTW do you mind if I reproduce those graphics, with credit, to explain the issue? I have a few places where I could make use of it, eg the replace-by-fee-rate post itself.

-- https://petertodd.org 'peter'[:-1]@petertodd.org

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Re: [bitcoin-dev] One-Shot Replace-By-Fee-Rate 2024-01-22 22:52 Peter Todd @ 2024-01-24 4:44 Peter Todd 2024-01-25 21:25 ` Murch 1 sibling, 0 replies; 8+ messages in thread From: Peter Todd @ 2024-01-24 4:44 UTC (permalink / raw) To: Bitcoin Protocol Discussion

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On Mon, Jan 22, 2024 at 10:52:01PM +0000, Peter Todd via bitcoin-dev wrote:

An even simpler fix would be to just require that all unconfirmed inputs in a replacement come from the same replaced transaction. That would make certain rare, but economically viable, replacements infeasible. But it would definitely fix the issue.

FYI I've implemented this fix, and pure replace-by-fee-rate with a minimum 2x fee-rate increate, in my Libre Relay fork:

https://github.com/petertodd/bitcoin/tree/libre-relay-v26.0

Similar to my full-RBF peering fork, it uses a new service bit to ensure it's peering with other Libre Relay nodes to make transaction propagation actually works.

I wouldn't call this a "public" release at this point. But people are welcome to review the code and try it out. I have a few mainnet and testnet nodes running it right now.

I'm very interested if anyone else can find any further exploits in the pure replace-by-fee-rate code. I'm also interested to see if anyone bothers to spend the money to do the well-known, and expensive, replace-by-fee-rate DoS attacks.

The fun thing about this release, is Libre Relay also removes the restrictions on OP_Return, which I'm sure will make some people quite angry... So maybe that'll give someone an incentive to attack it. :D I'm already sufficiently well connected to get oversized OP_Return's mined. So if you want to do that too, running a Libre Relay node will work.

-- https://petertodd.org 'peter'[:-1]@petertodd.org

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Re: [bitcoin-dev] One-Shot Replace-By-Fee-Rate 2024-01-22 22:52 Peter Todd 2024-01-24 4:44 Peter Todd @ 2024-01-25 21:25 ` Murch 1 sibling, 0 replies; 8+ messages in thread From: Murch @ 2024-01-25 21:25 UTC (permalink / raw) To: Bitcoin Protocol Discussion

Hi Peter,

On 1/22/24 17:52, Peter Todd wrote:

An even simpler fix would be to just require that all unconfirmed inputs in a replacement come from the same replaced transaction. That would make certain rare, but economically viable, replacements infeasible. But it would definitely fix the issue.

The replacements spend at most a single unconfirmed input in my infinite relay cycle example.

Murch

^ permalink raw reply [flat|nested] 8+ messages in thread

Re: [bitcoin-dev] One-Shot Replace-By-Fee-Rate 2024-01-22 18:12 Murch 2024-01-22 22:52 Peter Todd @ 2024-01-27 7:19 Peter Todd 2024-01-28 17:27 Murch 1 sibling, 1 reply; 8+ messages in thread From: Peter Todd @ 2024-01-27 7:19 UTC (permalink / raw) To: Murch, Bitcoin Protocol Discussion

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On Mon, Jan 22, 2024 at 01:12:45PM -0500, Murch via bitcoin-dev wrote:

Hi Peter,

On 1/18/24 13:23, Peter Todd via bitcoin-dev wrote:

Reposting this blog post here for discussion:

https://petertodd.org/2024/one-shot-replace-by-fee-rate

I saw your proposal mentioned on Stacker News and read it with interest. In response, I described a replacement cycle that can be used to broadcast the same five transactions repeatedly:

#393182

The gist is that by using two confirmed inputs and five transactions, you can use RBFr to reduce the absolute fee while raising the feerate to top block levels, then immediately use the current RBF rules to introduce a high-feerate transaction that beats the RBFr transaction but is hampered by a low-feerate parent and not attractive for mining, then use RBF to replace its low-feerate parent, then use the RBFr transaction again to reduce the absolute feerate. Due to the asymmetric replacements, the same transactions can replace each other in that order in every cycle. Please refer to the linked write-up for details, I’ve included weights, fees, and a transaction graph to make my example comprehensible.

Among those five transactions, the only transaction attractive for block inclusion would be the small RBFr transaction with a bottom-of-the-next-block feerate. Today, if it were mined it would amount to fees of around 4000 sats every few blocks to make the entire network relay transactions of more than 205,000 vB every few seconds. Given that my example is minimal, it should be possible to further increase bandwidth cost.

Assuming that I did not make a mistake, i.e. all the replacements are viable and my scenario is compatible with your proposal, the described One-Shot Replace-By-Fee-Rate proposal would not be safe for deployment on the network.

I actually tried this attack out, and it fails at step #4 due to the Rule #6, PaysMoreThanConflicts, check.

While on stacker.news you stated that:

tx_HS has 5000 vB and pays 21 s/vB, but since it spends an output from a
low-feerate parent, it’s mining score is only 1.95 s/vB.

and

You RBF tx_LL and tx_HS with tx_LM that has 100,000 vB and pays 3.05 s/vB (fee:
305,000 s) by spending the outputs C1 and C2. This is permitted, since only
tx_LL is a direct conflict, so the feerate of tx_HS does not have to be beat
directly.

tx_HS is considered to be a direct conflict, and its raw fee-rate does have to be beat directly. While ts_HS does spend an unconfirmed output, it appears that the fee-rate PaysMoreThanConflicts uses to calculate if ts_HS can be beaten is ts_HS's raw fee-rate. So looks like your understanding was incorrect on these two points.

FYI here is the actual test script I used to test this attack. You can run it using Bitcoin v26.0 with the -acceptnonstdtxn -mempoolfullrbf=1 command line arguments, with python-bitcoinlib v0.12.2 installed.

#!/usr/bin/env python3

import bitcoin bitcoin.SelectParams('regtest')

import bitcoin.rpc import sys

from bitcoin.core import * from bitcoin.core.script import * from bitcoin.wallet import *

proxy = bitcoin.rpc.Proxy()

my_addr = proxy.getnewaddress().to_scriptPubKey()

coins = proxy.listunspent(1)

print(coins[0:2])

txo1 = coins[0]['outpoint'] txo1_amount = coins[0]['amount'] txo2 = coins[1]['outpoint'] txo2_amount = coins[1]['amount']

print(txo1) print(txo2)

for i in range(0, 1): # Step 2 tx_ll = CTransaction( [CTxIn(txo1)], [CTxOut(txo1_amount - 100000, my_addr), CTxOut(0, CScript([OP_RETURN, b'x' * 90000]))])

r = proxy.signrawtransactionwithwallet(tx_ll)
assert(r['complete'])
tx_ll_signed = r['tx']

print('tx_ll = %s' % b2lx(proxy.sendrawtransaction(tx_ll_signed)))

tx_ls = CTransaction(
    [CTxIn(COutPoint(tx_ll.GetTxid(), 0))],
    [CTxOut(txo1_amount - 100000 - 300, my_addr)])
r = proxy.signrawtransactionwithwallet(tx_ls)
assert(r['complete'])
tx_ls_signed = r['tx']

print('tx_ls = %s' % b2lx(proxy.sendrawtransaction(tx_ls_signed)))

# Step 3
tx_hs = CTransaction(
    [CTxIn(COutPoint(tx_ll.GetTxid(), 0)),
     CTxIn(txo2)],
    [CTxOut((txo1_amount - 100000) + txo2_amount - 4000, my_addr)])

r = proxy.signrawtransactionwithwallet(tx_hs)
assert(r['complete'])
tx_hs_signed = r['tx']

print('tx_hs = %s ' % b2lx(proxy.sendrawtransaction(tx_hs_signed)))


# Step 4
tx_lm = CTransaction(
    [CTxIn(txo1),
     CTxIn(txo2)],
    [CTxOut(txo1_amount + txo2_amount - 300000, my_addr),
     CTxOut(0, CScript([OP_RETURN, b'x' * 90000]))])

r = proxy.signrawtransactionwithwallet(tx_lm)
assert(r['complete'])
tx_lm_signed = r['tx']

print('tx_lm = %s' % b2lx(proxy.sendrawtransaction(tx_lm_signed)))

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^ permalink raw reply [flat|nested] 8+ messages in thread

Re: [bitcoin-dev] One-Shot Replace-By-Fee-Rate 2024-01-27 7:19 Peter Todd @ 2024-01-28 17:27 Murch 2024-01-31 8:40 ` Peter Todd 0 siblings, 1 reply; 8+ messages in thread From: Murch @ 2024-01-28 17:27 UTC (permalink / raw) To: Bitcoin Protocol Discussion

Hi Peter,

Thanks you for investigate my concern and replicate the scenario I drafted.

On 27.01.24 02:19, Peter Todd wrote:

I actually tried this attack out, and it fails at step #4 due to the Rule #6, PaysMoreThanConflicts, check.

While on stacker.news you stated that:
 tx_HS has 5000 vB and pays 21 s/vB, but since it spends an output from a
 low-feerate parent, it’s mining score is only 1.95 s/vB.
and
 You RBF tx_LL and tx_HS with tx_LM that has 100,000 vB and pays 3.05 s/vB (fee:
 305,000 s) by spending the outputs C1 and C2. This is permitted, since only
 tx_LL is a direct conflict, so the feerate of tx_HS does not have to be beat
 directly.
tx_HS is considered to be a direct conflict, and its raw fee-rate does have to be beat directly. While ts_HS does spend an unconfirmed output, it appears that the fee-rate PaysMoreThanConflicts uses to calculate if ts_HS can be beaten is ts_HS's raw fee-rate. So looks like your understanding was incorrect on these two points.

I agree in the detail, but not about the big picture. You are right that it’s a problem that tx_LM and tx_HS spend the same input and therefore are direct conflicts.

Luckily, it is unnecessary for my scenario that tx_LM and tx_HS conflict. The scenario only requires that tx_LM conflicts with tx_LL and tx_RBFr. tx_HS is supposed to get dropped indirectly per the conflict with tx_LL.

It seems to me that my example attack should work when a third confirmed input c3 is introduced as follows: tx_LM spends c3 instead of c2, and tx_RBFr spends both c2 and c3, which allows the following four conflicts:

tx_HS and tx_RBFr conflict on spending c2
tx_HS and tx_LS conflict on spending tx_LL:0
tx_LL and tx_LM conflict on spending c1
tx_LM and tx_RBFr conflict on spending c3

tx_RBFr would end up slightly bigger and therefore have a bigger fee, but otherwise the number should work out fine as they are. I have not verified this yet (thanks for sharing your code), but I might be able to take another look in the coming week if you haven’t by then.

It seems to me that my main point stands, though: the proposed RBFr rules would enable infinite replacement cycles in combination with the existing RBF rules.

Murch

^ permalink raw reply [flat|nested] 8+ messages in thread

Re: [bitcoin-dev] One-Shot Replace-By-Fee-Rate 2024-01-28 17:27 Murch @ 2024-01-31 8:40 Peter Todd 0 siblings, 0 replies; 8+ messages in thread From: Peter Todd @ 2024-01-31 8:40 UTC (permalink / raw) To: Murch, Bitcoin Protocol Discussion

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On Sun, Jan 28, 2024 at 12:27:06PM -0500, Murch via bitcoin-dev wrote:

I agree in the detail, but not about the big picture. You are right that it’s a problem that tx_LM and tx_HS spend the same input and therefore are direct conflicts.

Luckily, it is unnecessary for my scenario that tx_LM and tx_HS conflict. The scenario only requires that tx_LM conflicts with tx_LL and tx_RBFr. tx_HS is supposed to get dropped indirectly per the conflict with tx_LL.

It seems to me that my example attack should work when a third confirmed input c3 is introduced as follows: tx_LM spends c3 instead of c2, and tx_RBFr spends both c2 and c3, which allows the following four conflicts:

tx_HS and tx_RBFr conflict on spending c2

tx_HS and tx_LS conflict on spending tx_LL:0

tx_LL and tx_LM conflict on spending c1

tx_LM and tx_RBFr conflict on spending c3

tx_RBFr would end up slightly bigger and therefore have a bigger fee, but otherwise the number should work out fine as they are. I have not verified this yet (thanks for sharing your code), but I might be able to take another look in the coming week if you haven’t by then.

It seems to me that my main point stands, though: the proposed RBFr rules would enable infinite replacement cycles in combination with the existing RBF rules.

Yes, that version of the attack does work, and I was able to succesfully create a modified version of the previous script that demonstrates it on a regtest node.

The attack is still exploiting a failure of our current RBF rules: the replacement of tx_RBFr with tx_HS represents a fee-rate/mining score decrease that replaces a more profitable transaction, tx_RBFR, with an much less profitable transaction, ts_HS. Notably, I belive that sdaufter's "Enforce incentive compatibility" pull-req(1) would reject it, though I haven't actually tested that.

To fix this issue I've added a commit(2) to the libre-relay-v26.0 branch that rejects replacements that spend unconfirmed inputs if the replacement is conflicting with multiple transactions at once.

Let's look at why this change fixes the issue, making cycles impossible.

Bitcoin Core already uses the term "mining score" to try to measure the profitability of a transaction. We'll define a similar measure, fee-rate-depth, a tuple consisting of the raw fee-rate of a transaction and the depth of the transaction, in terms of the maximum depth of unconfirmed parents that must be mined for the transaction to be mined. The fee-rate-depth is improved if the fee-rate is increased and/or the depth is decreased.

For example suppose we have the following unconfirmed transaction graph:

t1 <- t2 <- t3

The depth of t1 is 0, as it only spends confirmed inputs. The depth of t2 is 1, as it spends a 0-depth transaction, and the depth of t3 is 2, as it spends a 1-depth transaction.

Suppose we have a new transaction, t2b, that conflicts with t2, and with fee-rates t2 < t2b < t3. Assuming that the total fee paid by t2b is high enough, an RBF replacement is allowed:

t1 <- t2b

While t3 paid a higher fee-rate than t2b, the fee-rate-depth has still improved, because the depth of t2b is less than the depth of t3.

With this new change, is the fee-rate-depth always improved? Yes.

Rule #6/PaysMoreThanConflicts ensures that the fee-rate of direct conflicts is always improved by the replacement. With indirect conflicts, while the fee-rate may or may not be improved, the depth is improved, because we are replacing a deeper transaction with a shallower transaction.

Secondly, for direct replacements the modified HasNoNewUnconfirmed function ensures that the depth of fee-rate-depth is never made worse by prohibiting the replacement of shallower transactions with deeper transactions. This is impossible because with the new rule, if a transaction has any unconfirme dinputs at all - a non-zero depth - only a single transaction is allowed to be replaced at a time. Thus at worse the depth will remain constant, while rule #6 will ensure that the fee-rate is improved.

Obviously, we could probably improve on this further with more nuanced rules. But the HasNoNewUnconfirmed fix is simple to implement, and in practice shouldn't affect very many use-cases. Pretty much all replacements of transactions spending unconfirmed outputs is for CPFP, and I'm not actually aware of any wallets that try to batch CPFP transactions together. There probably are some. But it's certainly not common. That's sufficient for the purposes of Libre Relay, whose replace-by-fee-rate implementation is intended as a prototype to validate the idea.

-- https://petertodd.org 'peter'[:-1]@petertodd.org

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Thread overview: 8+ messages (download: mbox.gz / follow: Atom feed) -- links below jump to the message on this page -- 2024-01-18 18:23 [bitcoin-dev] One-Shot Replace-By-Fee-Rate Peter Todd 2024-01-22 18:12 Murch 2024-01-22 22:52 Peter Todd 2024-01-24 4:44 Peter Todd 2024-01-25 21:25 Murch 2024-01-27 7:19 Peter Todd 2024-01-28 17:27 Murch 2024-01-31 8:40 ` Peter Todd This is a public inbox, see mirroring instructions for how to clone and mirror all data and code used for this inbox

The other notable pinning attack against RBF is to cause BIP-125 Rule #5 to be exceeded. But that is easily solved by just rejecting transactions that would make transactions already in the mempool to be irreplaceable. ↩
There is no such thing as the mempool: every miner (and node) has their own mempool, and there's no mechanism to synchronize mempools beyond the best-effort broadcasting of transactions. The need for consensus is why we have the blockchain in the first place. ↩
For example, if transation $a$ is spent by $b$ , and the fee-rate $r_a \ge r_b$ , then the fee-rate of $a$ is the highest mineable replaced fee-rate. On the other hand, if $r_a < r_b$ , then the highest minable replaced fee-rate is computed as the CPFP package of $a$ and $b$ . We refer to this as a mineable fee-rate because while the fee-rate of $b$ may be higher, a miner can't obtain that fee-rate directly: $a$ must also be mined. ↩
This may require the cooperation of a mining pool willing to mine non-standard transactions. ↩
The relevant limit here is not the total size of a single transaction, because more than one transaction can be replaced at a time. Rather it's the default descendant size limit, which is slightly higher than the maximum transaction size. Note that in reality our $404{\small,}000\mathrm{byte}$ figure is a slight overestimate as the descendant size limit has units of virtual bytes rather than bytes. ↩
Assuming that the fee-rate paid by the spending and creation of the outputs was the same. This might not be the case as the attacker could setup the outputs to be spent in advance. ↩
Bandwidth Billing, accessed Jan 15th 2024. Specifically the excess bandwidth charge, ignoring the bandwidth included per month. There are many other hosting providers offering even cheaper bandwidth. ↩