Date: Fri, 06 Sep 2019 14:32:38 +0000
To: Christian Decker <decker.christian@gmail.com>,
	Bitcoin Protocol Discussion <bitcoin-dev@lists.linuxfoundation.org>
From: ZmnSCPxj <ZmnSCPxj@protonmail.com>
Reply-To: ZmnSCPxj <ZmnSCPxj@protonmail.com>
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Cc: "lightning-dev@lists.linuxfoundation.org"
	<lightning-dev@lists.linuxfoundation.org>
Subject: Re: [bitcoin-dev] Reconciling the off-chain and on-chain models
	with eltoo
Precedence: list

Good morning Christian,

This is effectively transaction cut-through.
I mention this in passing here: https://lists.linuxfoundation.org/pipermail=
/lightning-dev/2019-April/001986.html

> I observe that one may consider any offchain system a specialization of a=
n offchain transaction cut-through system.
> Thus, one may model changes to the offchain system state as the creation =
of some transactions, followed by a cut-through of those transactions into =
the new state.

Basically, we can send a transaction that spends a subset of the current st=
ate txos to the participants in the update mechanism.
Then the participants can agree that it is a valid spend of the specified s=
tate txos, and agree to sign a new state with the spent txos deleted and th=
e new txos of the transaction inserted.
Disagreement at this point is essentially a "if your tx is so valid why do =
you not try it on the base blockchain layer huh?" challenge and is basicall=
y an invitation to close it unilaterally and enforce the contract on the bl=
ockchain.

The "difficulty" in Poon-Dryja is not very onerous in my opinion; see the s=
ketch here: https://lists.linuxfoundation.org/pipermail/lightning-dev/2018-=
August/001383.html

Of note is that any contract with a relative locktime requirement would not=
 make sense to maintain offchain.
If one wishes to select a relative locktime relative to the current moment,=
 one can quite easily compute an absolute timelock.

Another note, is that contracts with timelocks need to be enforced onchain =
on or before the timelock.
Under Decker-Russell-Osuntokun the onchain enforcement needs to be triggere=
d early according to the CSV security parameter; this is not an issue under=
 Poon-Dryja (as the CSV is in a later transaction).
Under Decker-Russell-Osuntokun due to the use of `SIGHASH_NOINPUT` and the =
non-stable txids involved, any transaction you wish to transport in the off=
chain update mechanism needs to also be signed under `SIGHASH_NOINPUT`, but=
 again this is not onerous.
In any case it is "only" a matter of tradeoffs one is willing to work under=
 anyway, and Decker-Russell-Osuntokun is very cool and uses `nLockTime` and=
 `OP_CHECKLOCKTIMEVERIFY` in a very clever way.

Regards,
ZmnSCPxj