Lightning This Week | 616,864 – ZEBEDEE Engineering

If you’ve been using Circular payments in LND v0.9.0 you may want to read about this one — PR 3915 introduces additional protection against circular liquidity attacks. While most of us are now using of circular payment routes to rebalance our channels (because we’re all great operators of the network, right?), circular routes can also be used for nuisance activities such as saturating a channel with HTLCs.

The atomicity needed in a [Lightning Network] multihop payment enforces that the intermediate payments in a multihop route should be held until the complete route is constructed and all payments can be performed together. During the time the route is being constructed, nodes in the route lock the balance of the payment until such payment takes place.

While there are ongoing discussions on how to make protocol improvements to safeguard against these attacks, some steps can be taken to minimize exposure to them. One such method is to reject self-loop HTLC forwarding attempts. As Roasbeef puts it:

I refer to self-loops as instances wherein a node receives an HTLC with payment hash W over a link, then forwards out the HTLC W over the outgoing link, only to receive that same HTLC W over another link. This link may even be the very same link that was the target outgoing/incoming link.

This PR therefore disallows circular payments through the same channels. That said if you are relying on circular routes in your use case, make sure to add --allow-circular-route to your LND configuration to bypass these changes.

PR: https://github.com/lightningnetwork/lnd/pull/3915
Further PR Discussion: https://github.com/lightningnetwork/lnd/issues/3771
Channel Liquidity Attacks Paper: https://eprint.iacr.org/2019/1149.pdf