ryanthegentry on Nostr: Correct me if I’m wrong, but in my mind the mass exit attacker controls one or ...

Correct me if I’m wrong, but in my mind the mass exit attacker controls one or several routing nodes. During a full mempool, the attacker closes channels with bad states paying themself all the money in the channels, and prevents counterparties from publishing justice txs, right? So they claim all the funds in all the closed channels, regardless of prior inbound/outbound balance of each channel.

This attack is maximally effective theft-wise if the prior state of all channels is 100% inbound to the attacker, as they’ll go from having a claim on 0% of funds, to owning on-chain 100% of funds. This attack is minimally effective theft-wise if the prior state of all channels is 100% outbound from the attacker, as they’ll go from having a claim on 100% of funds to owning on-chain 100% of funds. So honest nodes can mitigate the damage from such an attack (and collectively lower the potential returns to an attacker) by consistently Looping out received funds from their local balance and realizing them on-chain.

I don’t necessarily consider that “hot potato,” with fees so low it makes sense for funds in LN to be high velocity! For this scenario, I always use the comparison to old timey brick and mortar merchants and their cash registers. During the day, the register fills up with cash. At the end of the day, to avoid theft, the proprietor would physically take their cash to the bank for safekeeping, and leave an empty register in their store. With bitcoin, you ofc can be your own bank by owning funds on-chain, so instead of taking cash to a 3rd party you can just send funds received on LN to an on-chain address you control. Loop or submarine swaps more generally help you do that without closing channels, to reward your liquidity providing peers for their service.