Date: Mon, 25 Apr 2022 16:03:12 +0000
To: bitcoin-dev@lists.linuxfoundation.org
From: Buck O Perley <buck.perley@protonmail.com>
Reply-To: Buck O Perley <buck.perley@protonmail.com>
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Subject: Re: [bitcoin-dev] Vaulting (Was: Automatically reverting
	("transitory") > soft forks)
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Just a couple of comments re-CTV vault security concerns.


1. One way to assuage the concern of the hot wallet vulnerability
is pre-program the spends such that the hot wallet can only
spend a certain amount from the hot wallet spend and the rest would
kind of be "recursive" in that it would be sent back to a
new instantiation of the CTV vault. I believe kanzure's vaults
does this w/ the non-covenant version using pre-signed transactions
(https://github.com/kanzure/python-vaults). While this doesn't
prevent the theft it caps off the total risk. I would argue that
this is strictly better than a multisig because you can also use
multisig as you normally would if you want but you have the option
if you think your hot key is secure to use that spending path.
You also get the nice benefit of learning about compromised
keys without having to risk all funds associated with that key.


2. As to how to improve UX for CTV with other proposals, I think
you get a lot of benefits when using with taproot because you can
use CTV in tapleaves to secure specific spend conditions, but can
always fall back to other off-ramps (e.g. a musig key path spend or
other script path conditions). Of course you can do this without
taproot but taproot makes this more space efficient. This idea has
been used to some effect in some recent exploration of how CTV can
help improve UX around DLCs. You could even do this to help with
the problems of not sending the right amount such that you have a
really really cold key or set of keys for example such that if you
have UTXOs that have values that can't be spent with the given CTV
commitment, then you just use that other branch.

- Buck

------- Original Message -------

> Date: Sun, 24 Apr 2022 18:03:52 -0500
> From: Billy Tetrud billy.tetrud@gmail.com
> =


> To: "Russell O'Connor" roconnor@blockstream.com, Bitcoin Protocol
> =


> Discussion bitcoin-dev@lists.linuxfoundation.org
> =


> Subject: Re: [bitcoin-dev] Vaulting (Was: Automatically reverting
> ("transitory") soft forks)
> Message-ID:
> CAGpPWDaeKYABkK+StFXoxgWEhVGzqY02KPGOFjOtt9W8UPRr1A@mail.gmail.com
> =


> Content-Type: text/plain; charset=3D"utf-8"
> =


> @Matt
> =


> > both of which are somewhat frustrating limitations, but not security
> =


> limitations, only practical ones.
> =


> So I think the first limitation you mentioned (that if your hot wallet's
> key gets stolen you need) can be legitimately considered a security
> limitation. Not because you need to rotate your keys, but because you mi=
ght
> not know your hot wallet key has been stolen. If you unvault an output t=
o
> your hot wallet, the thief could be lying in wait, ready to steal those
> funds upon them landing. At that point, you would then know your hot wal=
let
> key was compromised and could rotate your vault keys in order to prevent
> further theft. However, the fact that there is a clear theft vulnerabili=
ty
> is something I would say should be considered a "security limitation".
> =


> As you mentioned, this is of course also a security limitation of a hot
> wallet, so this setup definitely has a lot of advantages over a simple h=
ot
> wallet. However, if you compare it against a multisig wallet (eg 2 of 3)=
,
> you can see that while theft of a single key would never result in any
> theft in that setup, it could in a CTV vault. The other trade offs there
> are ones of practicality and convenience.
> =


> This isn't to say a CTV vault wouldn't be useful. Just that it has
> significant trade offs.
> =


> @Russel
> =


> > the original MES vault .. commits to the destination address during
> =


> unvaulting
> =


> I see. Looking at the MES16 paper, OP_COV isn't described clearly enough
> for me to understand that it does that. However, I can imagine how it
> might do that.
> =


> One possibility is that the intended destination is predetermined and
> hardcoded. This wouldn't be very useful, and also wouldn't be different
> than how CTV could do it, so I assume that isn't what you envisioned thi=
s
> doing.
> =


> I can imagine instead that the definition of the pattern could be specif=
ied
> as a number indicating the number of stack items in the pattern, followe=
d
> by that number of stack items. If that's how it is done, I can see the u=
ser
> inputting an intended destination script (corresponding to the intended
> destination address) which would then be somehow rotated in to the right
> spot within the pattern, allowing the pattern to specify the coins
> eventually reaching an address with that script. However, this could be
> quite cumbersome, and would require fully specifying the scripts along t=
he
> covenant pathways leading to a fair amount of information duplication
> (since scripts must be specified both in the covenant and in spending th=
e
> subsequent output). Both of these things would seem to make OP_COV in
> practice quite an expensive opcode to spend with. It also means that, si=
nce
> the transactor must fully specify the script, its not possible to take
> advantage of taproot's script hiding capabilities (were it to send to a
> taproot address).
> =


> However, my assumptions might be incorrect. If you think OP_COV would be=
 a
> useful opcode, I would encourage you to write up a complete specificatio=
n.
> =


> > What ways can we build a secured vault that commits to the destination
> =


> address?
> =


> Some kind of passed-through state allows doing this. With OP_COV (if my
> assumptions above are correct), the intended destination can be passed
> through the output script pattern(s). With my own proposed
> op_pushoutputstack
> https://github.com/fresheneesz/bip-efficient-bitcoin-vaults/blob/main/po=
s/bip-pushoutputstack.md,
> =


> state is passed as an attachment on the output more directly. Curious wh=
at
> you think about that proposal.
> =


> > Are there elegant ways of building secure vaults by using CTV plus
> =


> something else.
> =


> Since CTV predefines all the transactions that can happen under its
> control, passed state like this can't help because any dynamic state wou=
ld
> change the template and render the CTV transaction invalid. I don't see =
any
> way of solving this problem for CTV.
> =


> I'm curious how you think op_cat could enable this with CTV (other than =
the
> cat+schnorr tricks that don't require CTV at all).
> =


> =


> =


> On Sat, Apr 23, 2022 at 2:31 PM Russell O'Connor via bitcoin-dev <
> bitcoin-dev@lists.linuxfoundation.org> wrote:
> =


> > Okay, Matt explained to me the intended application of CTV vaults off
> > list, so I have a better understanding now.
> > =


> > The CTV vault scheme is designed as an improvement over the traditiona=
l
> > management of hot-wallets and cold-wallets. The CTV vault is logically=
 on
> > the "cold-side" and lets funds be sent from the "cold" side to one's o=
wn
> > the hot wallet after the unvaulting delay. In this case, the hot walle=
t
> > funds are always at risk, so it isn't unexpected that those funds coul=
d be
> > stolen. After all, that is how hot wallets are today. The advantage is
> > that funds can be moved from the "cold" side without needing to dig ou=
t the
> > cold keys.
> > =


> > The MES vault scheme applies to a different scenario. In the MES case =
it
> > is the hot funds are inside the vault, and it is the hot key that unva=
ults
> > the funds and sends them to customer's addresses after a delay. If the
> > hot-key is used in any unauthorised way, then funds can be sent to the
> > address of the cold key (the MES vault actually does something fancy i=
n
> > case of recovery, but it could be adapted to simply send funds to a co=
ld
> > wallet).
> > =


> > The MES vault lie somewhere between "better" and "different" when comp=
ared
> > to the CTV vault. If one is unwilling to use the MES vault on the hot =
side
> > and have every withdrawl vetted, then, while you could use the MES des=
ign
> > on the cold side like the CTV vault, it wouldn't really offer you any
> > advantages over a CTV vault. However, if you are interested in managin=
g
> > all your payments through a vault (as I've been imagining) then the CT=
V
> > vault comes across as ineffective when compared to an MES style vault.
> > =


> > On Sat, Apr 23, 2022 at 2:24 PM Matt Corallo lf-lists@mattcorallo.com
> > wrote:
> > =


> > > Still trying to make sure I understand this concern, let me know if =
I get
> > > this all wrong.
> > > =


> > > On 4/22/22 10:25 AM, Russell O'Connor via bitcoin-dev wrote:
> > > =


> > > > It's not the attackers only choice to succeed. If an attacker stea=
ls
> > > > the hot key, then they have
> > > > the option to simply wait for the user to unvault their funds of t=
heir
> > > > own accord and then race /
> > > > outspend the users transaction with their own. Indeed, this is wha=
t we
> > > > expect would happen in the
> > > > dark forest.
> > > =


> > > Right, a key security assumption of the CTV-based vaults would be th=
at
> > > you MUST NOT EVER withdraw
> > > more in one go than your hot wallet risk tolerance, but given that y=
our
> > > attack isn't any worse than
> > > simply stealing the hot wallet key immediately after a withdraw.
> > > =


> > > It does have the drawback that if you ever get a hot wallet key stol=
e you
> > > have to rotate all of your
> > > CTV outputs and your CTV outputs must never be any larger than your =
hot
> > > wallet risk tolerance
> > > amount, both of which are somewhat frustrating limitations, but not
> > > security limitations, only
> > > practical ones.
> > > =


> > > > And that's not even mentioning the issues already noted by the doc=
ument
> > > > regarding fee management,
> > > > which would likely also benefit from a less constrained design for
> > > > covenants.
> > > =


> > > Of course I've always been in favor of a less constrained covenants
> > > design from day one for ten
> > > reasons, but that's a whole other rabbit hole :)
> > =


> > _______________________________________________
> > bitcoin-dev mailing list
> > bitcoin-dev@lists.linuxfoundation.org
> > https://lists.linuxfoundation.org/mailman/listinfo/bitcoin-dev

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