Name: Sergi Delgado

Topic: Watchtowers and BOLT 13

Location: Potzblitz (online)

Date: May 24th 2020

Video: https://www.youtube.com/watch?v=Vkq9CVxMclE

Slides: https://srgi.me/resources/slides/Potzblitz!2020-Watchtowers.pdf

The Eye of Satoshi code: https://github.com/talaia-labs/python-teos

Draft BOLT 13: https://github.com/sr-gi/bolt13/blob/master/13-watchtowers.md

c-lightning watchtower plugin: https://github.com/talaia-labs/python-teos/tree/master/watchtower-plugin

c-lightning watchtower hook discussion:

https://github.com/ElementsProject/lightning/pull/3601

https://github.com/ElementsProject/lightning/pull/3645

https://github.com/ElementsProject/lightning/pull/3659

https://github.com/ElementsProject/lightning/issues/3724

Conner Fromknecht presentation on watchtowers: https://diyhpl.us/wiki/transcripts/boltathon/2019-04-06-conner-fromknecht-watchtowers/

Intro

I am going to be talking about towers and a bit about BOLT 13 too. Before jumping into watchtowers and this general idea of watchtowers for the Lightning Network that most of the community knows about I would like to go back one step back to try to narrow down the paradigm that we are going to be talking about.

One Step Back

When we think about watchtowers we think about Lightning channels and covering your commitment transactions with penalty transactions in case a counterparty tries to cheat while you are offline or you suffer a crash. But towers can be used for more. I’m going to try to cover this today. The general paradigm when we talk about third party watching systems aka watchtowers is basically we are going to have users and towers, users and servers. The user is going to be sending some data to the server alongside a trigger. It doesn’t what kind of data it is, it doesn’t matter what kind of trigger. The server is going to be looking for those triggers in one specific communication channel. In the case of Lightning it is going to be the blockchain, in another case it is going to be something completely different. If one of those triggers is seen then the server, the watcher is going to perform an action on the provided data. That is basically what we are going to be talking about today in general terms. Let’s jump into the Lightning stuff.

Lightning Transactions in 1 minute

I am not going to assume any kind of knowledge for the audience. I will talk about Lightning transactions, the transactions we are going to be using and how can we use it. First of all the funding transaction of Lightning channels. That is how everything starts. That comes from one of the parties and goes to a 2-of-2 multisig inside a witness script. In general terms it is a 2-of-2 multisig that comes from one of the parties. Then from that transaction we are going to be creating several commitment transactions which are the updates on the state of the channel. Every single time we want to pay the counterparty or the counterparty wants to pay us there is going to be one commitment update. We are going to have several versions of the commitment transaction, one transaction that spends from the fund. If everything goes right then at some point we close a channel with a closing transaction. We are going to get the last version of the commitment transaction, we are going to take out the locks and we are going to call it the closing transaction and send it to the network. If there is some misbehavior in the channel, if someone tries to cheat then it could be the case that the channel is breached. By taking one old commitment transaction and trying to send that to the network. If that happens that is what we call a breach. That normally should trigger a penalty from the other side of the channel. If Alice tries to cheat then Bob is going to create the penalty transaction and claim all the funds in the channel for himself. As you can see there are two transactions highlighted here. Commitment transaction and penalty transactions. Those are the ones we care about.

Basic Watchtower Protocol

With this we can set up what is going to be a basic watchtower protocol. We are going to have two parties, our user Frodo, you may know him from Middle Earth and there is also The Eye of Satoshi. I don’t know how much you know about Lord of the Rings but he was the good guy. From the user part we are going to have some data. We are not going to get into much detail right now but have in mind the commitment transaction ID and the penalty transaction is part of this data that we need. We are going to persist this data somehow for now. To create an appointment that we are going to send to the tower. This data is going to trigger the tower to start watching the blockchain for breaches in the channel. We are not going to go into much detail for now. The idea is that once the tower has the information it can start looking for breaches using the commitment transaction ID. Frodo is a big party goer and he loves going out and go out of signal and not respond for many hours. Fortunately The Eye has him covered him here. While he is offline The Eye continues watching the blockchain. At some point it may see the commitment transaction popping into a newly mined block. If that happens then that is going to trigger a breach. The breach is seen by the tower and then The Eye is going to notice this and send the penalty transaction to the network and hopefully getting it into the next few blocks. We move the reward back mostly to the user and some part of it is sent to the tower too. That basically concludes the idea of how this works. We have data, triggers and a watching party that is checking the blockchain.

There are four main things we are going to focus on. First, the kind of information that the user has. This is the red left side of the screen. The commitment and the penalty and how this is used to create the appointment. There is also how do they send to the tower? Who can send this kind of information and how? We are also going to have how the tower stores this information? What kind and in what means? Finally what is the reward mechanism? These four steps actually translate to four main properties that I think are the four main trade-offs of designing a non-custodial watchtower. We are going to be talking about non-custodial watchtowers. We can jump into different designs later on. This is the less invasive version of building this.

(Non-Custodial) Watchtower Design Trade-offs

First we have privacy which translates to what does the watchtower know about the nodes? What information is provided and can be inferred? There is also the access. Who can access the watchtower? Who can use it and under what means? The third is storage. What kind of information has to be stored and how is this information going to grow? Then definitely we have cost. What is the cost of running this service? Who is paying this cost and what percentage of the cost and how? We will see that these four properties are intertwined. Talking about one is going to affect the rest.

No privacy vs full privacy

We are going to start by talking about the privacy first. Here we have two main sides. The non-privacy side and the full privacy side. Arguably there can be designs in the middle. I am going to focus on these two. We can jump into discussions for designs in the middle if you want. The main idea here is that you can have a completely non-private communication between the user and the tower where the user is sending all the information in the clear. This means that the set up is pretty similar to the example we were seeing a few slides ago. The user was sending the commitment transaction ID and the penalty transaction in the clear to the tower. That means that the tower can verify that the information that is being received looks like a proper transaction and a proper transaction ID. Even though the tower cannot know if the transaction it is receiving is correct or not. It can look like a valid transaction but the tower doesn’t know anything about the commitment transaction apart from the ID. The tower doesn’t know if at any point that penalty transaction is going to be valid. If she is going to be able to forward it to the network or it is spending from a completely invalid transaction that is never going to work. Finally the downsides, the tower is going to learn payment information about the user. For every single update it is going to know how the penalty transaction is supposed to look. It can infer what payments have been performed between one update and the other. This is definitely not ideal.

Then we have the high or full privacy approach where the user is sending the information encrypted to the tower. We will see more details about this, how this exactly works later on. For the now the idea we have to mind is that the tower is only going to learn about the penalty transaction if a breach happens. Otherwise the tower is only storing encrypted blobs and shouldn’t learn much about the user in this sense. In this second approach the tower cannot know anything about the transactions either but that doesn’t seem a problem as knowing about the whole transaction was not useful anyway. This second approach also implies heavier computation. There is going to be some caching involved, there is going to be some encryption and decryption involved but that is a trade-off we have for the privacy of the user. It seems reasonable.

Summarizing this, in both of the approaches the user can send the usual information to the tower and the tower is not going to be able to distinguish what is useful and what is useless. The storage is going to be high in any of the cases. Therefore the privacy design seems better than the non-privacy design. We can keep the privacy of the user especially in the Lightning Network where we are trying to get a high privacy design. That is something that we would like to have.

Private vs Public Access

Moving on we have the access part. This is can be separated into two different approaches. We can have the private access or the public access. Again this can be in the middle but I am going to discuss the far ends here. Private for me is going to be used by a very limited number of users who most likely are going to be trusted. This means that you are going to be running the tower for yourself. Or maybe yourself and some friends. Some people you may trust. I may run it for me and a couple of friends. My friends run it for them and the others so we are all covered. Instead of running one watchtower we have N replications in the ring of people running this. This is great because there is no DoS risk whatsoever as long as everyone behaves properly. This is potentially a free service from the user perspective since the tower is running with all the cost. The user may not be paying anything. The main drawback is that it cannot accommodate the whole network. If you are not charging anything for the service someone is going to have to pay for maintaining it. It is hard to offer this for free.

On the other side we have the public access watchtower. This is a tower that anyone can use which is the goal at the end of the day. This can be offered as a service. It doesn’t matter who runs this in principle. Some access is going to be required. I will jump into this a little bit later. Then it is most likely going to have to be a paid service. The potential DoS attack surface is going to be really high.

Summarizing, private access is good for a limited amount of users. Low storage and low to no cost to use it but cost for running it. On the other side the public access is going to have high storage depending on the number of users you have. Potentially it is going to have low cost. At the end of the day we may see a free market emerging here too because the better service you can offer for the lowest price may take over the market. It is also true that the users can choose more than one tower.

Max Hillebrand: Low cost or high cost. Low storage or high storage. Can you give some roundabout numbers of what we are talking here?

O(N) Storage

For storage the requirements are going to be high modulo the number of channel updates. You have to store information for every single channel update from the users that are sending you data. Let’s say in the current approach the user is sending the whole encrypted penalty transaction. That is roughly speaking in the order of 200 to 300 bytes depending on what the set up is. It should be a two inputs, two outputs SegWit transaction. It depends. There could be different set ups but it should be between these numbers. For every single update that the user is doing, for every payment the channel is receiving, the user has to send this 200ish bytes plus the trigger which is going to be like 60 additional bytes plus some overhead. Around 300 to 400 bytes per update in the current state.

Max Hillebrand: What about the computational cost? Could this be done on a Raspberry Pi or do you quickly need a more powerful server?

I think it can. I have a Raspberry Pi here for testing. I have been testing my implementation on the Raspberry Pi for a while. It depends on the amount of traffic you have. How your Pi is going to support all that traffic. It is also true that when you are running a tower one of the main things you need to care about is high availability. You should be there when others are not there. Depending on the service you are offering, if you are offering this as a service for the network you may want to have something with high availability. A Raspberry Pi may not be best. But I am going to be running one on a Raspberry Pi for sure. In terms of cost the cost of running the service, how much would it cost the user to do it? Ideally it would be a fraction of the fee you are paying for the payment you are performing in the channel. The problem with this is that if the fees for using the tower are way too high then it is not going to be worth using it. Especially if whatever you are risking in the channel is not much. You have to find a trade-off between wanting to use a service because the service is worth it and because you are paying for that. I have no numbers on what should be paid for every single update. My understanding is that it should be a fraction of the fee you are paying for that payment.

That covers storage. The idea is that it doesn’t matter what we do in this approach, the storage is going to be high modulo the number of channel updates. We can try to have a strategy to align incentives of the user and the tower. We will see some examples of this in a bit.

Altruistic vs Non-Altruistic Towers

Finally we have the cost. Can you run a tower with no cost for the user? Sure but then you are most likely going to be risking having DoS on your tower. Especially if somebody wants to take it out. Then you can also offer it for a low cost, whatever low cost means. As long as you price it properly then high traffic may mean some profit. Some of the incentives I was talking about before. You can allow the user for example to delete all data. Let’s say you have a user that has closed a channel and then the tower has some data relating to that channel. The tower doesn’t know anything about that channel per se. The user does. So the user could free that space in the tower to use that space to backup other channels he has open or to backup channels he may open later on. As long as the incentives are aligned then you can actually be offering a discount to the user to delete some of the information that is never going to be used. That depends on how you want to run it.

To summarize private access and low storage is good. Public access with no cost is most likely going to overflow your tower. Finally if you charge low cost, as long as you price it properly that is going to mean high storage. How do we summarize all this?

Ideal Watchtower (No Eltoo)

The ideal watchtower without eltoo would be one with high privacy, everything you are sending to a tower is encrypted, has public access so it can be offered as a service, has non-exploitable O(N) storage, you are going to have O(N) storage anyway so what can you do in order to not suffer nasty attacks just by people sending you useless data? How can you price it so instead of an attack it is profit for you? And then a very low cost. Finally the cherry on the cake will be interoperable watchtowers. It doesn’t matter what tower you are running, it doesn’t matter what node you are running as long as the service you are looking for is provided by that tower you can use it.

BOLT 13

That brings us to BOLT 13. What is BOLT 13 in a nutshell? It is the effort to put all this together. All the efforts from the community for some years already to build towers in a way that it doesn’t matter what you are running. You can find a tower and use it. If you are running lnd and someone is offering a tower based on c-lightning you can run it. If you have a mobile wallet with eclair and someone is running a lnd tower you can run it. It doesn’t matter. That is the main idea. How can we build this protocol to be extensible and to offer different kinds of services. A basic service plus other services that people may want to have. Then as long as you agree with a tower on the services you are looking for that is enough.

Privacy via Monitor Approach

How does this work? Let’s jump more into the meat, the actual design of how this data is encrypted and sent. This comes from a proposal from Tadge (Dryja) from Scaling Bitcoin 2016 in Milan. The basic idea is pretty straightforward. You are going to have the penalty transaction encrypted using some information from the commitment transaction ID. Then you are also going to have a hint or a locator derived from the same commitment transaction ID. You are going to have these two pieces sent to the tower and the tower should be able to react the commitment transaction ID in the blockchain. That is the approach to the best of my knowledge lnd is following these days. It is the same as what we are following.

User side

How does this work in more detail? We have the penalty transaction, a bunch of bytes here. We also have the commitment transaction ID. What we are going to do is get the first half of the commitment transaction ID, the 16 most significant bytes and that is going to be a locator. We are also going to use the CHACHA20POLY1305 cipher and a secret key derived from the commitment transaction ID by hashing it to encrypt the penalty transaction. We set the cipher, we get the private key and we use zero as an IV. We encrypt the penalty transaction to get the encrypted blob. With the locator and the encrypted blob we send an appointment to the tower.

Tower side

From the tower side what we need to do is for every transaction ID in every block we generate a locator. We get the 16 most significant bytes (MSB) and generate a locator. If that locator is in the list of appointments we have then we have to generate the secret key from the same transaction ID. The IV is going to be zero again. Then decrypt the blob belonging to that appointment to get potentially a penalty transaction. Then we need to send the penalty transaction to the network and monitor it so there are no re-orgs and to make sure it gets in. Potentially in future versions of this with anchor outputs and such we will also be able to bump the fee. At the moment it is more complicated I’d say. That’s it for how it works internally.

Revenue Models

What about the revenue models? How can the tower be paid for the service? There are three main approaches here, two of them are being used at the moment. One is the bounty approach which to the best of my knowledge lnd and Electrum is using this. Then we have the per-appointment approach and subscription approach which is used by BLW. The bounty approach is pretty straightforward. The idea is that you have an output for the tower in the penalty transaction. Then if the tower is able to include the penalty transaction in a block the tower is going to get some part of the whole capacity of the channel. The per-appointment approach is completely different. It is like the opposite approach from that. You pay the tower beforehand appointment per appointment. It doesn’t matter if the transaction gets in or not. Then we have the subscription approach which is similar to the per-appointment approach but instead of paying one-by-one you pay for a whole bunch of data in the tower. You are paying for storage over time. Let’s see how these three approaches translate into properties.

Bounty - Revenue Models

The bounty approach from the user side, it is nice. It allows the user to pay the tower only if the penalty transaction makes it to the chain. This means that you know the tower is going to try as hard as it can to make it because otherwise it isn’t going to be paid. That is awful for the tower because the user can front run the tower especially if the information that the user is sending is not actual information about the channel and is never going to be triggered. Then the user can hire multiple towers with no problem. You can free ride, you hire the whole network for whatever appointment you want and then only one tower is going to be paid. You can see here how this is never going to scale. Most of the servers are going to get wrecked while one of them is potentially going to win. The main problem of this approach is that the tower can use child-pays-for-parent (CPFP) to bump the fee of the penalty transaction. That is awesome. That is one of things we need to make this work properly. The user is going to set the fee when the appointment is sent but the tower may react to that way later. If the fees have changed drastically, especially up, the penalty transaction may bounce and there is nothing the tower can do if we are not following something similar to this. Finally the user can easily send spam to the tower, sending encrypted junk that is never going to get triggered and will build up in the tower.

Per Appointment - Revenue Models

On the other hand we have the per appointment approach. This is good for the tower and not so good for the user, the contrary. The tower is paid beforehand which is good for the tower but the tower can get paid and not do anything about it. Definitely not good for the user. A rational user may only hire so many towers because you have to pay beforehand. Trying to exploit this may have a cost. No CPFP because there is no output for a tower here. Spamming the tower has a cost. There is a payment for every single update which may be troublesome especially if you don’t have a direct channel with the tower. Paying the tower using other channels, multihop payments, may imply that you have to hire a tower for the payment you have sent to the tower. This definitely not ideal. It is easily exploitable due to the lack of entry cost for the user. That is something I was not planning to talk about but if you are interested we can discuss it later on. The main idea is that since a user can just send information to a tower straight away with no entry cost there are some nasty attacks that the user can perform to build up the storage in the tower and make the tower perform a lot of computation with no actual reward.

Subscription - Revenue Models

The subscription model is pretty similar but minimizes the two last properties. There are less payments which may be easier for both. Exploiting is going to be harder because you have to pay for the whole subscription. If you want to sybil yourself to perform some attacks on the tower you are going to have to pay one subscription for every sybil you are creating.

Subscriptions vs Bounty

We have seen that both the subscription and bounty approach have pros and cons. Which one should we use? Why not use both? The idea is that if we get the good things of both sides we can actually have a pretty solid approach where the user is only going to pay a fraction of the cost beforehand and the rest is going to be paid as a bounty. This can be seen as the user paying the tower for the storage first and then paying additional if the tower is able to perform whatever trigger it is supposed to. This also allows us to run different approaches here as we will see in a couple of slides. Then the rational user would only hire so many towers. That’s the same thing that comes from the subscription model. You can use CPFP here which comes from the bounty approach. Spamming the tower has a cost. We minimize the number of payments and exploiting it is more expensive. It is far from ideal but it is the closest we can get to something that works for both.

User Authentication

If you have a subscription you need some way of authenticating who has paid you for the service. That helps prevent resource abuse. It can be done in several ways. You can use the secret key of the user node to sign messages and authenticate the node. That is tied to the node ID so we may want to prevent that. You can do the same thing with an ephemeral key. You generate that key to communicate with the tower and you achieve the exact same goal without having to reveal anything from the identity of the user, better privacy. You can also use authentication by LSAT or similar approaches. In The Eye of Satoshi we are using something quite similar, sending signed messages but the API we are using is pretty similar to what LSAT is doing. At the end of the day as long as you can know who has paid, you have this paywall in order to receive the data and to keep watching on based on that it should be fine.

Extensions

The BOLT has room for extensions. We have proposed at least one. There are multiple things here that you can add. In the current version there is an accountability extension that is supposed to be for making sure that the tower is doing whatever she has agreed to do. If it is replying to channel breaches it is going to be that. Then you can build things on top of this like reputation systems where you can prove one tower has cheated so you can tell the community “Don’t use this service anymore because they were offering this watching service and they failed to watch my channels.” It can always be used for completely different things like backups. I think you covered this with Christian (Decker) the other day. The idea is basically the same. You are sending data to the tower encrypted. The tower doesn’t know anything about that. You are sending that alongside a trigger but that trigger doesn’t have to be triggered. That is also part of the rationale between splitting the storage plus the triggering of whatever you are doing. In this case you can also use that for backups. You are paying for the backups. Finally you can extend the trigger logic to work with something else. Recently there has been some discussion about vaults. In the Revault proposal they actually need some kind of watching service in order to react. The trigger is a little bit different from the triggers in Lightning but you can have the additional information inside the encrypted blob as long as whatever information you have in there is not raw data. You have some rich format. It is not defined for now but you can have enriched formatted data that the tower can parse and see “What I received is for this kind of response. If I have agreed to perform this kind of thing I can do that.”

Current State of the Code

The current state of code for The Eye of Satoshi, we have a standalone free open source tower with a plugin for c-lightning that we released two or three weeks ago. For now it is based on subscriptions that are for free. Paid subscriptions soon, whatever soon means in this space. We are actively working towards to getting paid subscriptions. The idea of the design is that we are working on a modular design. We would like to have different payment models that you can plug in or plug out. If you want to use BTCPay Server for example to perform all the payment logic you should be able to plug it in and use that. If you want to use Lightning and take care all of the HTLCs yourself you should also be able to do that. But that is a work in progress. Right now the communication is done via REST API using HTTPS. It can be used for backups out of the box even though it is not meant to be used for backups at the moment. I would like to have more things added in order to give more assurance for the user that the backups are going to be there. But you could use it for backups right now if you want. Then there are a couple of instances for testing, mainnet and testnet.

Resources

That’s it. I have a couple of resources here about the code itself, BOLT 13 if people are interested in checking it out. We are actively looking for feedback in both so feel free. There is also the c-lightning plugin that you can download, add it to your c-lightning plugin folder and run it out of the box. It is written in Python like the rest of code. There are READMEs and such but feel free to reach out if you have any problem.

If you run it and you want to test the live instances, you can run your own if you want, but if you want to play around it is basically running lightning-cli registertower towerid@host:port. You have here the IDs and host for the two instances.

mainnet

02f695cd372bcd949ff29465e72296eb959468e013a9b080742fb60fff27edc5f2@https://teos.pisa.watch:443

testnet

02f695cd372bcd949ff29465e72296eb959468e013a9b080742fb60fff27edc5f2@https://teos-testnet.pisa.watch:443

Q&A

Max Hillebrand: A question regarding privacy. On the network level, on the communication level what if for example a user uses IP, clearnet and uses the same connection all the time? Does that already lead to some deanonymization?

You can definitely leak the information the user is sending to the IP. Then if that is the same IP the user is using to run the node then most likely you are able to deanonymize all the information that comes from that node. The goal especially for HTTP would be to run it using Tor or something similar. If you are running it over Lightning which is also another communication layer you can use and it is being used for the lnd approach for example. Then you don’t have that problem. You have to try to decouple this because otherwise you can do the best you can do on the application layer to keep the privacy but then you are leaking it at the network layer.

Max Hillebrand: Another point you brought up was the payment which is very important. If you do a regular payment over the Lightning Network the payment for the watchtower is already a channel update. It would have to hire a watchtower again for the payment transaction. How would that work out?

It is pretty tricky. It is something that I recursively go back and forth to check. You can have another tower to watch it but then you are going to have the problem of one side to another. What you have addressed is the payment to the tower. As long as nothing goes wrong on that side and the tower isn’t trying to cheat you on the payment you have performed to the tower. You are going to always have that specific payment that the tower may be in the clear.

Jeff Gallas: Javier has commented that he installed The Eye of Satoshi a couple of days ago and got it to work. That’s some immediate feedback. Kasso seems to have a general understanding that it may take some time to get into it. When we initially announced this conversation there was a comment on Reddit “If you don’t intend to be online most of the time you shouldn’t publish your channels. When other users try to route payments through your channels their payments will take longer to find a working route. All is good if you use only unpublished channels on the occasionally online Lightning node.” I guess the question is basically what are the specific use cases from a practical point of view? Who is going to use watchtowers? Is it a backup solution just in case you go offline or is it something you would use for your mobile node for casual payments where you only have one or two channels? How does it go together in the big picture?

I think there are several use cases. Mobile wallets are definitely one of them. If we think about mass adoption, it won’t come through every single person using Lightning running a full node whether we like it or not. I would love everyone to run a full node but I don’t think that is going to happen. For Lightning nodes you are most exposed because your node may only be online when you are opening the app. The rest of the time it may be offline. Or it may ask you to open the node every now and then in order to update the information the node has to prevent this kind of stuff. But then you are playing with annoying the user which may not be the best thing to do for the UX. From my point of view mobile wallets are definitely one use case. For non mobile wallets I also think it is a use case. There are two things here. The first is what if you get data corruption? Let’s say you have no backups and your node gets corrupted. You are completely in the clear now. There is nothing you can do about it. You can try to negotiate back all the information from the counterpart as long as the counterparty is honest. If not how are you going to dispute if you don’t have information. One of the cool things about towers is that if we get mass use of towers one of the things you can do with the protocol is lowering the absolute dispute time. Now one of the UX problems you may have is that every single time you have to force close a channel you have to wait a long time because that time is there to prevent people from cheating. But if you are sure that you have this service there that can save you then you can lower down that worst case scenario. I don’t want to say you are covered but you have narrowed it down because someone may be providing the data even though you are not there. Even in the worst case the UX is better. If you do that then being offline for a short time as a full node may also be a problem if you are covering as a tower. You are moving the problem from one side, the worst case having to wait several days, to not being covered with a tower.

Max Hillebrand: What happens when the HTLC is put onchain? In that case what does the watchtower do here?

The current approach does not cover HTLCs because how HTLCs are negotiated right now. You are missing the information needed to trigger the success or the timeout. That is actually a pretty good question because we have been discussing that recently. There are several approaches you can do. You could send that information to the tower alongside the encrypted blob. That means every time you are updating HTLCs, first the blobs are going to be way bigger and for every single time you are updating HTLCs you may need to update information in the tower too. You can see how that would be troublesome. The other thing I was thinking about recently is that the same thing that works for commitment transactions and justice transactions works for HTLCs and the penalty route for HTLCs. You could send the revocation of the HTLC to the tower encrypted with the hash of the HTLC transaction. Then if the HTLC transaction is seen the tower can actually respond to that. But that is potentially going to be way smaller than the rest of the funds in the channel. Is it worth it? I don’t know. We have talked about that but I don’t have a proper solution because there are too many open questions.

Jeff Gallas: There is another comment on Mattermost. “I would argue that in the case you have an open channel with the tower he might be incentivized to avoid triggering the action for a breach. Knowing you are offline so you won’t react yourself, he will try to cheat you by force closing the channel. You should never rely on a single watchtower.” What do you think about this?

Obviously you should never trust a single watchtower. That is something I would never do. In terms of the tower cheating the user, if the user is paying the tower for this it is incremental for the tower but decremental for the user. If we are assuming no bidirectional payment from the tower to the user, the tower isn’t sending anything through the channel to the user I don’t see any incentive for the tower to cheat because it would always be in our worst case. If that is not the case though then sure, you could start making payments in that channel and then cheat. Especially if no one else is covering that. That opens more questions like how you should pay towers. You don’t have to pay towers through Lightning. You can pay towers through Lightning and that is one way of doing it but you can also pay towers through whatever other means. Through fiat or onchain transactions.

Max Hillebrand: You said earlier this is not considering eltoo. How does both Taproot and eltoo change the whole picture?

Eltoo changes the whole order of storage completely. You don’t have to store as much information. That means that running a tower will be way cheaper which means that probably more people will run it for a medium to big number of users. At this point you don’t have that many attacks relying on you having space to store all the information. But it doesn’t change the picture in terms of high availability. If the tower is not there to respond that is going to be a problem anyway. It makes it easier. Most of the information you are sending to the tower may be useless. If you can give information to the tower to construct whatever the tower has to do instead of giving all the raw information that is going to be better. Less data, less complication. It resembles quite a lot the custodial solution that I was referencing at the beginning. I have been talking about non-custodial but there are some people also talking about what if I want to run a tower by myself only for me? Why do I have to do all this crazy stuff? Can I share a key with the tower and then send the information and the tower does the rest? The answer is yes absolutely, you can do it. You are replicating your key which means that your odds of being hacked by having your key in hot storage are higher. But that is on you. The idea is being able to offer this as a service. In that case you are only sending the keys. The keys and other pieces of information the tower can use to construct the transaction. The amount of information that needs to be stored goes down quite a lot.

Jeff Gallas: Michael (Folkson) has a couple of questions. You did answer one of his questions which was that focusing on your own watchtower first before experimenting with outsourced watchtowers might be a good idea. How advanced or mature is the watchtower BOLT? Also the c-lightning can be used by different kinds of watchtower designs/plugins? What was the process like getting the watchtower hook into c-lightning.

Yeah definitely focus on running your own before doing something else. I would argue, people don’t have to agree, that it doesn’t matter if you are running it for yourself or someone else, I would run it using the privacy approach and not the replicated key approach. That means your storage cost and storage requirements are going to be higher. But it also means that if your tower gets exposed then there is no data leakage, no key leakage, nothing. That also means that depending on your setup your tower doesn’t have to be as protected as your node or your cold storage. That depends on you. I always think that the less points of failure that could could leak important information the better. Definitely run your tower before running it for someone else. Then regarding BOLT 13 and the hook for c-lightning. We have had two iterations of BOLT 13. It is definitely not finished. We have to work on the whole communication part for example. The message types are not defined so it wouldn’t work if you wanted to implement it because there are some things we haven’t defined yet. There is more discussion I would like around it especially because of the edge cases and attacks. I had an amazing conversation with the c-lightning and lnd people about this. As long as the conversation keeps going it should get in at some point. To the best knowledge it is not like BIPs. Every now and then, like once a year some part of the community gathers to push this forward. In terms of how long it may take if it gets accepted I have no clue. The c-lightning hook, that is Christian’s work. I have built a plugin for The Eye of Satoshi using the c-lightning plugin system. Any tower can use that hook to the best of my knowledge. What they are providing is an interface that gives you the commitment transaction ID and the penalty transaction for every single update. Then once you get the information what you do from that point on is on you. I’m guessing you can use the plugins to establish Lightning Network communication from that point. If that is the case you could easily build a plugin to communicate to a lnd tower for example. If you follow their approach. How easy was it to build? I think it was pretty easy. The plugin system for c-lightning is awesome. It has bindings for different languages. The Python one is amazing. It took me a while because I have to do things on both sides, the server side and the user side. But not hard to be honest. Even if you are working with a system you are not familiar with you don’t need that much to write a plugin with c-lightning.

Jeff Gallas: There are also a couple of questions from webprogrammer. He is asking how many penalty transactions do you have to monitor and decrypt? Could a Raspberry Pi 4 handle it? The hardware system requirements for running a watchtower.

I would have to run a stress test for my Pi and work out at what point it doesn’t hold up. Honestly I don’t have the numbers to hand to say “You can run it with 500MB and Core whatever.” Since people are asking about it I will run the numbers and publish it on Twitter. It is not resource consuming whatsoever in my experience.

Jeff Gallas: webprogrammer is also asking whether watchtowers will use the Lightning Network gossip network to announce their service?

That is a really good question and it is also a question I have. Peer discovery is always complicated when you are working with this. It is the same as for nodes connecting to the Lightning Network. Are you going to connect to random nodes or are you going to connect to the nodes you want to connect to? It is the exact same thing. Right now there is no discovery part of the protocol. I was thinking about in the first version of the BOLT and I never did it for the second revision because after some conversations there were points in favor and against. We use it for gossiping technically. Should we use it? I would love to discuss it. Reply to the mailing list or start a conversation about it. I don’t know. Watchtowers are something that even though they are used for Lightning they don’t need Lightning for anything. When you start looking at it it is pretty mind-blowing. Our current implementation is not implementing anything in Lightning. The bech32 encoding for BOLT 11 invoices, that is the only part of Lightning it is using at the moment. Message signing in the same way as lnd and c-lighting are doing just to be compatible with that. The thing is that the tower is only looking at the blockchain. It looks for blocks and looks for information in the blocks. Do we want to use Lightning for that? I think we can and I think we should. Would we use it? It is something that the community has to decide. It is not on me. Even though I am trying to push this forward it is not something that only I am doing. I would love people to jump in and contribute so please do.

Max Hillebrand: The whole concept of a watchtower as you said earlier is not really tied to Lightning itself. It can be very generalized. If a watchtower is just a general data storage are there ways that the watchtower can prove to the user that the data is still kept by him? That he did not forget or delete the data?

That is an amazing question. That is something we are planning to include in the BOLT. I was discussing this at Advancing Bitcoin and with ZmnSCPxj a couple of months ago. The thing is you can prove the data is in the tower and you may also be able to prove that the tower can reply to the trigger. The first one is way easier, the second one is more tricky. In order to prove that the tower is keeping the information you can probe the tower. Our tower has a message to request the information and the tower will reply with the information. The tower can be used as a backup service out the box. You provide the information and then you query later on. You have the decryption key, that is all you need. Right now it is not part of the BOLT but I mean to include it. That is the first way of probing the tower. You can just send probes every now and then and make sure the information is there. The fact that the information is there doesn’t mean that the tower is going to reply with that information. But at least it is holding it, that is one step forward. You can always send some probes to the tower to see if it is going to reply by creating fake jobs that only that tower has. If the tower replies good. If the tower doesn’t reply it is not actually triggering. I would love it to be easier than that. The dead man switch (Joost Jager) is similar to the watchtower. You are sending information to something and that information gets triggered because of something. He had a really nice idea of how to keep paying the server in order to make sure you are only going to pay if they are holding the information. You can actually make the payment conditional to whatever data the tower is supposed to be holding. For example, the hash of whatever appointments I have sent to you. You create a HTLC and they are supposed to have the preimage. At the end you may have paid a subscription, the tower may have not been doing its job, when you try to top up that subscription later on the tower can’t accept the payment because they are not holding the information. That is pretty neat and something I will definitely consider adding.