He-HTLC: Revisiting Incentives in Hashed Time-Locked Contracts
Hashed Time-Locked Contracts (HTLCs) are a widely used primitive in blockchain systems for such applications as payment channels, atomic swaps, and so on. Unfortunately, HTLC is incentive-incompatible and is vulnerable to bribery attacks. MAD-HTLC is an elegant solution aiming to address the incentive incompatibility of HTLC. In this talk, Kartik Nayak (Duke University) shows that MAD-HTLC is also incentive-incompatible. But beyond that, Kartik goes on to demonstrate the importance of considering actively rational behaviors by showing three novel reverse-bribery attacks against MAD-HTLC that can be implemented using Trusted Execution Environments. He also shows that reverse bribery can be combined with original delaying attacks to render MAD-HTLC insecure regardless of the relationship between collateral and deposits made in the contract. Based on these findings, he devises a new lightweight smart contract specification, He-HTLC, that meets the HTLC specification even in the presence of actively rational miners.
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