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From: "Swambo, Jacob" <jacob.swambo@kcl.ac.uk>
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Thread-Topic: Distributed Delegated Pre-Signed Transactions (DDPST)
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Subject: [bitcoin-dev] Distributed Delegated Pre-Signed Transactions (DDPST)
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I am building a solution for distributed, delegated pre-signed transactions=
 (DDPST). This post introduces what DDPST are and why I think they are rele=
vant for multiple applications. If you are working on application that can =
benefit from such a construction and want me to use your application in the=
 proof of concept code, please reach out. All feedback is welcome on the co=
ncept in general.

Pre-signed transactions (PSTs) are utilized in numerous off-chain protocols=
 including Lightning Network, non-custodial trading, Statechains, and custo=
dy protocols. PSTs are useful because they enable restricted access to fund=
s and their custody can be *delegated* with limited risk. Compare this with=
 the arbitrary control over funds that comes with access to the private key=
s. It is conceivable then that a broad class of applications would benefit =
from a mechanism to securely delegate PSTs. A mechanism to *distribute* cus=
tody of PSTs across multiple entities can act as a practical countermeasure=
 for numerous attacks (e.g. denial-of-service, bribery, blackmail, etc.). M=
oreover, systems of accountability among the custodians, with proofs of cor=
rect and incorrect behaviour, form a foundation for engineering incentive s=
tructures that align with the objectives of the application at hand. Finall=
y, distributed custody of PSTs could enable new trust models for the privac=
y of delegated PSTs using multi-party computation.

# Examples

Consider first the example of vault-custody protocols [1], where there is a=
 requirement for a distributed network monitoring and response system to de=
tect breeches and trigger a recovery process. It is critical to protect aga=
inst denial-of-service (DoS) attacks that seek to compromise a monitoring n=
ode in order to force the custody operation into a recovery process. In thi=
s attack the adversary broadcasts the recovery transaction and reduces the =
accessibility of the wallet owner's funds. A method for distributing custod=
y of the recovery transaction offers defence-in-depth, and a method for del=
egating custody enables outsourcing the monitor and response service (see W=
atchtower implementations currently under development [2,3]). A further imp=
rovement for the protection of PSTs, that comes from distributing custody, =
is that *proactive* security models can be instanciated such that successfu=
l attacks must occur in a limited time-frame [4].

Consider next the example of justice transactions in the current Lightning =
Network model. Here, it is critical that justice transactions are broadcast=
 in a timely manner in response to detecting that either party is attemptin=
g to close the channel with a prior state. Attacks rely on disrupting the b=
roadcast of the justice transaction through, for example, bribing the watch=
tower to wait. The watchtower can broadcast late and claim that it was an h=
onest failure due to network issues. The victim has no recourse to punish t=
he watchtower nor the malicious channel participant. If instead the justice=
 transaction was distributed among a set of independent watchtowers, and an=
 accountability system was in-place for their actions, a more robust incent=
ive structure could be engineered. Moreover, distributing custody of the ju=
stice transaction can provide a new privacy mechanism for both operational =
security of a business but also to mitigate targeted attacks such as briber=
y.

Best regards,
Jacob

# References

[1] Jacob Swambo, Spencer Hommel, Bob McElrath, and Bryan Bishop. Custody P=
rotocols Using Bitcoin Vaults. 2020. https://arxiv.org/abs/2005.11776

[2] The eye of satoshi - lightning watchtower. https://github.com/talaia-la=
bs/python-teos

[3] Private altruist watchtowers. https://github.com/lightningnetwork/lnd/b=
lob/master/docs/watchtower.md

[4] Ran Canetti, Rosario Gennaro, and Amir Herzberg. Proactive security: Lo=
ng-term protection against break-ins. CryptoBytes, 3:1=968, 1997.

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<div class=3D"WordSection1">
<p class=3D"MsoNormal">I am building a solution for distributed, delegated =
pre-signed transactions (DDPST). This post introduces what DDPST are and wh=
y I think they are relevant for multiple applications. If you are working o=
n application that can benefit from
 such a construction and want me to use your application in the proof of co=
ncept code, please reach out. All feedback is welcome on the concept in gen=
eral.
</p>
<p class=3D"MsoNormal"><o:p>&nbsp;</o:p></p>
<p class=3D"MsoNormal">Pre-signed transactions (PSTs) are utilized in numer=
ous off-chain protocols including Lightning Network, non-custodial trading,=
 Statechains, and custody protocols. PSTs are useful because they enable re=
stricted access to funds and their
 custody can be *delegated* with limited risk. Compare this with the arbitr=
ary control over funds that comes with access to the private keys. It is co=
nceivable then that a broad class of applications would benefit from a mech=
anism to securely delegate PSTs.
 A mechanism to *distribute* custody of PSTs across multiple entities can a=
ct as a practical countermeasure for numerous attacks (e.g. denial-of-servi=
ce, bribery, blackmail, etc.). Moreover, systems of accountability among th=
e custodians, with proofs of correct
 and incorrect behaviour, form a foundation for engineering incentive struc=
tures that align with the objectives of the application at hand. Finally, d=
istributed custody of PSTs could enable new trust models for the privacy of=
 delegated PSTs using multi-party
 computation.&nbsp; </p>
<p class=3D"MsoNormal"><o:p>&nbsp;</o:p></p>
<p class=3D"MsoNormal"># Examples</p>
<p class=3D"MsoNormal"><o:p>&nbsp;</o:p></p>
<p class=3D"MsoNormal">Consider first the example of vault-custody protocol=
s [1], where there is a requirement for a distributed network monitoring an=
d response system to detect breeches and trigger a recovery process. It is =
critical to protect against denial-of-service
 (DoS) attacks that seek to compromise a monitoring node in order to force =
the custody operation into a recovery process. In this attack the adversary=
 broadcasts the recovery transaction and reduces the accessibility of the w=
allet owner's funds. A method for
 distributing custody of the recovery transaction offers defence-in-depth, =
and a method for delegating custody enables outsourcing the monitor and res=
ponse service (see Watchtower implementations currently under development [=
2,3]). A further improvement for
 the protection of PSTs, that comes from distributing custody, is that *pro=
active* security models can be instanciated such that successful attacks mu=
st occur in a limited time-frame [4].</p>
<p class=3D"MsoNormal"><o:p>&nbsp;</o:p></p>
<p class=3D"MsoNormal">Consider next the example of justice transactions in=
 the current Lightning Network model. Here, it is critical that justice tra=
nsactions are broadcast in a timely manner in response to detecting that ei=
ther party is attempting to close
 the channel with a prior state. Attacks rely on disrupting the broadcast o=
f the justice transaction through, for example, bribing the watchtower to w=
ait. The watchtower can broadcast late and claim that it was an honest fail=
ure due to network issues. The victim
 has no recourse to punish the watchtower nor the malicious channel partici=
pant. If instead the justice transaction was distributed among a set of ind=
ependent watchtowers, and an accountability system was in-place for their a=
ctions, a more robust incentive
 structure could be engineered. Moreover, distributing custody of the justi=
ce transaction can provide a new privacy mechanism for both operational sec=
urity of a business but also to mitigate targeted attacks such as bribery.&=
nbsp;
</p>
<p class=3D"MsoNormal"><o:p>&nbsp;</o:p></p>
<p class=3D"MsoNormal">Best regards,</p>
<p class=3D"MsoNormal">Jacob</p>
<p class=3D"MsoNormal"><o:p>&nbsp;</o:p></p>
<p class=3D"MsoNormal"># References</p>
<p class=3D"MsoNormal"><o:p>&nbsp;</o:p></p>
<p class=3D"MsoNormal">[1] Jacob Swambo, Spencer Hommel, Bob McElrath, and =
Bryan Bishop. Custody Protocols Using Bitcoin Vaults. 2020. https://arxiv.o=
rg/abs/2005.11776</p>
<p class=3D"MsoNormal"><o:p>&nbsp;</o:p></p>
<p class=3D"MsoNormal">[2] The eye of satoshi - lightning watchtower. https=
://github.com/talaia-labs/python-teos</p>
<p class=3D"MsoNormal"><o:p>&nbsp;</o:p></p>
<p class=3D"MsoNormal">[3] Private altruist watchtowers. https://github.com=
/lightningnetwork/lnd/blob/master/docs/watchtower.md</p>
<p class=3D"MsoNormal"><o:p>&nbsp;</o:p></p>
<p class=3D"MsoNormal">[4] Ran Canetti, Rosario Gennaro, and Amir Herzberg.=
 Proactive security: Long-term protection against break-ins. CryptoBytes, 3=
:1=968, 1997.<o:p></o:p></p>
</div>
</body>
</html>

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