So basically this is the same as Flood and loot described in some paper 1 or 2 years ago.
Yes, and authors say
The exploited mechanisms partially differ from those used by the attacks presented in this paper, since we do not make use of multi-hop payments, but rather direct channels between nodes.
Translation from academic: we confirm Flood & Loot scheme. However, this attack was being discussed once with Anton Kumaigorodsky who was quite skeptic about attack trade-offs by itself. Attacker has to spend a lot of money to cause congestion and after attack the outcome is not clear.
Looking deeper into history there where 3 papers about LN attacks which released simultaneously, these are:
š Counting Down Thunder: Timing Attacks on Privacy in Payment Channel Networks š Flood & Loot: A Systemic Attack On The Lightning Network š Time-Dilation Attacks on the Lightning Network
Are node operators supposed to run their own watchtowers? Or, do you pay a third party to manage a watchtower for you? I think I'm not understanding where a watchtower sits in the lightning network.
Attack 1. Bad guys maneuver themselves into key positions in LN and then suddenly turn off their nodes. Result: LN will experience problems for a short time until somebody opens new channels to fix the problem. Also it's not like maneuvering into key positions is an easy feat to accomplish.
Attack 2: Bad guys open a $100 channel, pay $100 to their other node but then close the $100 channel pretending that they never paid the $100. Watchtowers must slash the bad guys. The point of the paper is that if the bad guys do this a lot and if the watchtowers are not ready to pay higher fees then some stupid watchtowers might fail to slash before the deadline. This raises 2 questions: