He-HTLC: Revisiting Incentives in HTLC

Sarisht Wadhwa, Jannis Stoeter, Fan Zhang, Kartik Nayak

Network and Distributed System Security (2023)

Abstract

Hashed Time-Locked Contracts (HTLCs) are a widely used primitive in blockchain systems. Unfortunately, HTLC is incentive-incompatible and is vulnerable to bribery attacks. MAD-HTLC (Oakland'21) is an elegant solution aiming to address the incentive incompatibility of HTLC.

In this paper, we show that MAD-HTLC is also incentive-incompatible. The crux of the issue is that MAD-HTLC only considers passively rational miners. We argue that such a model fails to capture active rational behaviors. We demonstrate the importance of taking actively rational behaviors into consideration by showing three novel reverse-bribery attacks against MAD-HTLC that can be implemented using Trusted Execution Environments (TEEs) or zero-knowledge proofs (ZKPs). We further show that reverse bribery can be combined with original delaying attacks to render MAD-HTLC insecure regardless of the relationship between collateral and deposit. Based on the learnings from our attacks, we devise a new smart contract specification, He-HTLC, which is lightweight and inert to incentive manipulation attacks. HE-HTLC, according to us, is the first specification to meet the HTLC specification even in the presence of actively rational miners.

@inproceedings{DBLP:conf/ndss/WadhwaSZN23,
  author       = {Sarisht Wadhwa and
                  Jannis Stoeter and
                  Fan Zhang and
                  Kartik Nayak},
  title        = {He-HTLC: Revisiting Incentives in {HTLC}},
  booktitle    = {30th Annual Network and Distributed System Security Symposium, {NDSS}
                  2023, San Diego, California, USA, February 27 - March 3, 2023},
  publisher    = {The Internet Society},
  year         = {2023},
  url          = {https://www.ndss-symposium.org/ndss-paper/he-htlc-revisiting-incentives-in-htlc/},
  doi          = {10.14722/ndss.2023.24775}
}