Closing a channel in Lightning Network

4

I have some doubts about the closure of a lightning network channel. As far as I know, there can be (al least) 4 different scenarious:

  1. one node decides to close the channel, and the other one accept the decision. The channel is then succesfully closed.
  2. one node decides to close the channel, but the other node doesn't respond to its request. A time period passes, and the channel will be closed with the transaction of the first node. In this case, what would happen if a user tries to close the channel with a malicious transaction (i.e., with an older transaction), and the other user doesn't respond?
  3. one node decides to close the channel with an older transaction, and the other node claim all the funds due to a malicious intention.
  4. one node decides to close the channel but the other node refuses. Is it possible this scenario? What would happen in this case?

Bruce Wayne

Posted 2018-10-25T08:12:57.040

Reputation: 337

Answers

6

The first three scenarios are indeed possible, the last one is identical to the second.

  1. This is called a collaborative close. It has the advantage of using a lower on-chain fee since the transactions are not time critical and the users get their coins back immediately (no dispute time).
  2. If the other node is unresponsive (offline or doesn't sign a collaborative close), you can do a unilateral close. The downside of a unilateral close is that the closing party will have their funds unavailable until the dispute is settled (usually about 24 hours) and higher fees are leveraged since this is a pre-signed transaction that is time-critical to get confirmed.
  3. This is called a breach-attempt, and is the reason for the dispute period above. The breach is basically publishing an old unilateral close transaction, and it needs to give the counterparty time to react and punish the breaching party.

So in all cases well-behaved parties get their funds back, the difference is just in how long it takes.

cdecker

Posted 2018-10-25T08:12:57.040

Reputation: 7 878

Thank you for your answer. I have just one questione, about the 2nd scenario. As I asked, if I try to close a channel with a malicious transaction (like the one in point 3) and the other node is unresponsive, would I be able to "steal" money? – Bruce Wayne – 2018-10-25T15:11:43.053

@BruceWayne: If the other node is unresponsive and has not assigned any watchtowers, then yes. This is the reason for the concept of watchtowers. – Meni Rosenfeld – 2018-10-25T17:42:39.860

1No, you cannot steal all the funds in the channel if the other party is unresponsive. What you can do is attempt to commit an old state in which you had more funds, but the total amount is limited to what you once had in the past.

Furthermore, this attempt to commit an old state makes you the misbehaving party from scenario 3 and you'd expose yourself to being punished by the other side, so you'd better be sure that they are not coming back to punish you for the dispute period. They might even be try to breach, so just don't try it. – cdecker – 2018-10-25T20:05:21.220

Asked: 2018-10-25T08:12:57.040

Viewed: 1 282 times

Active: 2019-04-29T03:45:31.283