This week’s newsletter describes continued discussion about optionally allowing nodes to enable full RBF, relays a request for feedback on a design element of the BIP324 version 2 encrypted transport protocol, summarizes a proposal for reliably attributing LN failures and delays to particular nodes, and links to a discussion about an alternative to using anchor outputs for modern LN HTLCs. Also included are our regular sections with the announcements of new software releases and release candidates—including a security critical update for LND—and descriptions of notable changes to popular Bitcoin infrastructure software.

## News

• Mempool consistency: Anthony Towns started a discussion on the Bitcoin-Dev mailing list about the consequences of making it easier to configure Bitcoin Core’s policies for transaction relay and mempool acceptance, such as was done by the addition of the mempoolfullrbf option to Bitcoin Core’s development branch (see Newsletters #205, #208, #222, and #223). He claims that “this differs from what core has done in the past, in that previously we’ve tried to ensure a new policy is good for everyone (or as nearly as it can be), and then enabled it as soon as it’s implemented. Any options that have been added have either been to control resource usage in ways that don’t significantly [affect] tx propagation, to allow people to revert to the old behaviour when the new behaviour is controversial (eg the -mempoolreplacement=0 option from 0.12 to 0.18), and to make it easier to test/debug the implementation. Giving people a new relay behaviour they can opt-in to when we aren’t confident enough to turn on by default doesn’t match the approach I’ve seen core take in the past.”

Towns then contemplates whether this is a new direction for development: “full RBF has been controversial for ages, but widely liked by devs […] so maybe this is just a special case and not a precedent, and when people propose other default false options, there will be substantially more resistance to them being merged, despite all the talk about users having options that’s going on right now.” But, assuming it is a new direction, he evaluates some potential consequences of that decision:

• It should be easier to get default-disabled alternative relay options merged: if giving users more options is seen as better, there are many aspects of relay policy that can be made configurable. For example, Bitcoin Knots provides a script pubkey reuse (spkreuse) option for configuring a node to refuse to relay any transactions which reuse an address.

• More permissive policies require widespread acceptance or better peering: A Bitcoin Core node by default relays transactions with eight peers via outbound connections, so at least 30% of the network needs to support a more permissive policy before a node has a 95% chance of finding at least one randomly-selected peer that supports the same policy. The fewer nodes that support a policy, the less likely it is that a node will find a peer supporting that policy.

• Better peering involves tradeoffs: Bitcoin nodes can announce their capabilities using the services field of the P2P addr, addrv2, and version messages, allowing nodes with common interests to find each other and form sub-networks (called preferential peering). Alternatively, full node operators with common interests can use other software to form independent relay networks (such as a network among LN nodes). This can make relay effective even when just a few nodes implement a policy, but nodes implementing a rare policy are easier to identify and censor. It also requires miners to join these sub-networks and alternative networks, raising the complexity and cost of mining. That increases the pressure to centralize transaction selection, which also makes censorship easier.

Additionally, nodes implementing different policies from some of their peers won’t be able to take full advantage of technologies like compact block relay and erlay for minimizing latency and bandwidth when two peers already have some of the same information.

Towns’s post received multiple insightful responses, with discussion ongoing as of this writing. We will provide an update in next week’s newsletter.

• BIP324 message identifiers: Pieter Wuille posted to the Bitcoin-Dev mailing list a response to the update of the BIP324 draft specification for the version 2 P2P encrypted transport protocol (v2 transport). To save bandwidth, v2 transport allows replacing the existing protocol’s 12-byte message names with identifiers as short as 1 byte. For example, the version message name, which is padded out to 12 bytes, could be replaced with 0x00. However, shorter message names increase the risk of conflict between different future proposals to add messages to the network. Wuille describes the tradeoffs between four different approaches to this problem and requests opinions about the subject from the community.

• LN routing failure attribution: LN payment attempts can end in failure for a variety of reasons, from the ultimate receiver refusing to release the payment preimage to one of the routing nodes temporarily being offline. Information about which nodes caused a payment to fail would be extremely useful to spenders for avoiding those nodes for near-future payments, but the LN protocol today doesn’t provide any authenticated method for routing nodes to communicate that information to a spender.

Several years ago, Joost Jager proposed a solution (see Newsletter #51), which he has now updated with improvements and additional details. The mechanism would ensure identification of the pair of nodes between which a payment failed (or between which one of them an earlier failure message was censored or became garbled). The main downside of Jager’s proposal is that it would significantly increase the size of LN onion messages for failures if other LN properties remained the same, although the size of onion messages for failures wouldn’t need to be as large if the maximum number of LN hops was decreased.

Alternatively, Rusty Russell suggested that a spender could use a mechanism similar to spontaneous payments where each routing node is paid one sat even if the ultimate payment fails. The spender could then identify which hop the payment failed at by comparing how many satoshis it sent to how many satoshis it received back.

• Anchor outputs workaround: Bastien Teinturier posted to the Lightning-Dev mailing list a proposal for replacing anchor outputs with multiple presigned versions of each HTLC at different feerates. Anchor outputs were introduced with the development of the CPFP carve-out rule for allowing fees to be added to a transaction via the CPFP mechanism in a way that wouldn’t be pinnable for LN’s two-party contract protocol. However, Teinturier notes that using CPFP requires every LN node keep a pool of non-LN UTXOs ready to spend at any moment. By comparison, presigning multiple versions of HTLCs each with different fees allows those fees to be paid directly from the HTLC’s value—no additional UTXO management is required.

He’s seeking support from other LN developers for the idea of moving to multiple feerate HTLCs. All discussion as of this writing has occurred on Teinturier’s PR.

## Releases and release candidates

New releases and release candidates for popular Bitcoin infrastructure projects. Please consider upgrading to new releases or helping to test release candidates.

• LND 0.15.4-beta and 0.14.4-beta are security critical releases containing a bug fix for a problem processing recent blocks. All users should upgrade.

• Bitcoin Core 24.0 RC2 is a release candidate for the next version of the network’s most widely used full node implementation. A guide to testing is available.

Warning: this release candidate includes the mempoolfullrbf configuration option which several protocol and application developers believe could lead to problems for merchant services as described in newsletters #222 and #223. Optech encourages any services that might be affected to evaluate the RC and participate in the public discussion.

## Notable code and documentation changes

Notable changes this week in Bitcoin Core, Core Lightning, Eclair, LDK, LND, libsecp256k1, Hardware Wallet Interface (HWI), Rust Bitcoin, BTCPay Server, BDK, Bitcoin Improvement Proposals (BIPs), and Lightning BOLTs.

• Bitcoin Core #23927 restricts getblockfrompeer on pruned nodes to heights below the node’s current synchronization progress. This prevents a footgun arising from retrieving future blocks making the node’s block-files ineligible for pruning.

Bitcoin Core stores blocks in files of about 130 MB in whatever order it receives them. Pruning will discard entire block files, but will not discard any file containing a block not processed by synchronization. The combination of a small data allowance and repeated use of the getblockfrompeer RPC could cause multiple block-files ineligible for pruning, and cause a pruned node to exceed its data allowance.

• Bitcoin Core #25957 improves the performance of rescans for descriptor wallets by using the block filter index (if enabled) to skip blocks that don’t spend or create UTXOs relevant to the wallet.

• Bitcoin Core #23578 uses HWI and recently merged support for BIP371 (see Newsletter #207) to allow external signing support for taproot keypath spends.

• Core Lightning #5646 updates the experimental implementation of offers to remove x-only public keys (instead using compressed pubkeys, which contain an extra byte). It also implements forwarding of blinded payments, another experimental protocol. The PR description warns it “does not include generating and actually paying invoices with blinded payments.”

• LND #6517 adds a new RPC and event that allow a user to monitor when an incoming payment (HTLC) is fully locked in by the commitment transaction being updated to reflect the new channel balance distribution.

• LND #7001 adds new fields to the forwarding history RPC (fwdinghistory) indicating which channel partner forwarded a payment (HTLC) to us and the partner to whom we relayed the payment.

• LND #6831 updates the HTLC interceptor implementation (see Newsletter #104) to automatically reject an incoming payment (HTLC) if the client connected to the interceptor hasn’t finished processing it within a reasonable amount of time. If an HTLC isn’t accepted or rejected before its expiry draws near, the channel partner will need to force close the channel to protect its funds. This merged PR’s automatic rejection before that expiry ensures the channel stays open. The spender can always try to send the payment again.