MAD-HTLC: Because HTLC is Crazy-Cheap to Attack
Itay Tsabary, Matan Yechieli, Alex Manuskin, Ittay Eyal

TL;DR
This paper introduces MAD-HTLC, a novel, miner-enforced security mechanism for HTLCs that deters misbehavior and bribery attacks, enhancing the security of blockchain-based payment channels and atomic swaps.
Contribution
It presents MAD-HTLC, a new design leveraging miners for security, along with formal proofs, implementation on Bitcoin and Ethereum, and analysis of bribery vulnerabilities.
Findings
MAD-HTLC effectively deters misbehavior with miner enforcement.
Implementation patches show easy integration into existing blockchain clients.
Bribery attacks can be cost-effective, with small incentives yielding large rewards.
Abstract
Smart Contracts and transactions allow users to implement elaborate constructions on cryptocurrency blockchains like Bitcoin and Ethereum. Many of these constructions, including operational payment channels and atomic swaps, use a building block called Hashed Time-Locked Contract (HTLC). In this work, we distill from HTLC a specification (HTLC-Spec), and present an implementation called Mutual-Assured-Destruction Hashed Time-Locked Contract (MAD-HTLC). MAD-HTLC employs a novel approach of utilizing the existing blockchain operators, called miners, as part of the design. If a user misbehaves, MAD-HTLC incentivizes the miners to confiscate all her funds. We prove MAD-HTLC's security using the UC framework and game-theoretic analysis. We demonstrate MAD-HTLC's efficacy and analyze its overhead by instantiating it on Bitcoin's and Ethereum's operational blockchains. Notably, current…
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