International Association
for Cryptologic Research

Users of decentralized financial networks suffer from inventive security exploits. Identity-based fraud prevention methods are inapplicable in these networks, as they contradict their privacy-minded design philosophy. Novel mitigation strategies are therefore needed. Their rollout, however, may damage other desirable network properties.

In this work, we introduce an evaluation framework for mitigation strategies in decentralized financial networks. This framework allows researchers and developers to examine and compare proposed protocol modifications along multiple axes, such as privacy, security, and user experience.

As an example, we focus on the jamming attack in the Lightning Network. Lightning is a peer-to-peer payment channel network on top of Bitcoin. Jamming is a cheap denial-of-service attack that allows an adversary to temporarily disable Lightning channels by flooding them with failing payments.

We propose a practical solution to jamming that combines unconditional fees and peer reputation. Guided by the framework, we show that, while discouraging jamming, our solution keeps the protocol incentive compatible. It also preserves security, privacy, and user experience, and is straightforward to implement. We support our claims analytically and with simulations. Moreover, our anti-jamming solution may help alleviate other Lightning issues, such as malicious channel balance probing.