Strategic Analysis of Griefing Attack in Lightning Network

Hashed Timelock Contract (
HTLC
) in Lightning Network is susceptible to a
griefing attack
. An attacker can block several channels and stall payments by mounting this attack. A state-of-the-art countermeasure, Hashed Timelock Contract with Griefing-Penalty (
HTLC-GP
) is found to work under the classical assumption of participants being either honest or malicious but fails for rational participants. To address the gap, we introduce a game-theoretic model for analyzing griefing attacks in
HTLC
. We use this model to analyze griefing attacks in
HTLC-GP
and conjecture that it is impossible to design an efficient protocol that will penalize a malicious participant with the current Bitcoin scripting system. We study the impact of the penalty on the cost of mounting the attack and observe that
HTLC-GP
is
weakly effective
in disincentivizing the attacker in certain conditions. To further increase the cost of attack, we introduce the concept of
guaranteed minimum compensation
, denoted as
$\zeta $
, and modify
HTLC-GP
into
$\mathrm {HTLC{-}GP}^{\zeta }$
. By experimenting on several instances of Lightning Network, we observe that the total coins locked in the network drops to 28% for
$\mathrm {HTLC{-}GP}^{\zeta }$
, unlike in
HTLC-GP
where total coins locked does not drop below 40%. These results justify that
$\mathrm {HTLC{-}GP}^{\zeta }$
is better than
HTLC-GP
to counter griefing attacks.