Honest Lightning Network Users Beware: Bitcoin Core Contributors Reveal Three Ways an Attacker Can Steal Funds

TL;DR: Bitcoin Core developers connected to Chaincode Labs recently published the latest Lightning Network (LN) security vulnerability based on so-called time-dilation. Their research concluded such attacks “currently seem to be the most practical way to steal funds via an Eclipse attack for several reasons. Neither hashrate access is required nor the attacks are targeted at merchants only.”

Bitcoin Core Contributors Reveal Time-Dilation Attacks for Lightning Network

Bitcoin Core developers Antoine Riard and Gleb Naumenko, connected to Chaincode Labs, published Time-Dilation Attacks on the Lightning Network, a 13-page paper that outlines three ways an attacker can steal funds from honest LN users. “The attacks require dilating the time for victims to become aware of new blocks by eclipsing (isolating) victims from the network and delaying block delivery,” Riard and Naumenko explain. “While our focus is on the LN, time-dilation attacks may be relevant to any second-layer protocol that relies on a timely reaction.”

In addition to developing, reviewing, testing, and maintaining the reference BTC  implementation, Chaincode Labs developed FIBRE, hosts several engineering residencies, a BTC fee estimation algo, along with creating products like Compact Blocks and BetterHash. More recently, co-author Gleb Naumenko, now formerly of Chaincode Labs, became the second grantee of cryptocurrency exchange BitMEX, pocketing $100,000 spread out over a year “aimed at improving [BTC’s] robustness, scalability and privacy.” LN, of course, is the vaunted off-chain, second-layer scaling solution for BTC, meant to overcome chronic mempool congestion an high transaction fees plaguing the world’s valued cryptocurrency by market capitalization.

Lightning Network
Mallory and Mallet are attackers, Bob is a time-dilated victim. Steps 4-5 happen simultaneously. The featured image has Mallory is an attacker, Bob is a time dilated victim, Alice simply routes a payment via Bob.

Time-Dilation Attacks on the Lightning Network “explored applying Bitcoin’s peer-to-peer layer attacks against the Lightning Network to steal funds from payment channels,” Riard and Naumenko state plainly. Calling LN “really cool” because it offers “tremendous opportunities in terms of scalability, confidentiality, and functionality,” they also warn those come “at a cost of new security assumptions.” A time-dilation attack, then, “controls the victim’s access to the [BTC] network (hard, but not impossible) and delays block delivery to the victim. After that, the attacker exploits that the victim can’t access recent blocks in a timely manner. In some cases, it is enough to isolate the victim only for two hours,” making “a couple (totally legit) actions on the Lightning Network towards the victim’s channels, and at the same time commits a different state instead.”

Riard and Naumenko hold out hope for LN, but continue to stress security tradeoffs. “More specifically, we explored what can be done when an attacker isolates (eclipses) a user of the Lightning Network, and feeds blocks to the victim at a slower rate,” they insist. “We showed that time-dilation cannot be addressed by simply detecting slow block arrival, and implementing sophisticated detection measures is not trivial. We argued that time-dilation attacks are currently the most practical way of stealing funds via Eclipse attacks since time-dilation attacks do not require access to hashrate and an attacker doesn’t have to purchase anything from a victim. The Eclipse attack cost can be justified against both light clients (the cost is low) and full nodes (an attacker may steal all liquidity of wealthy nodes at once).”

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