Re: Hashed Timelock Agreements (HTLAs)

I also like the term HTLA, it really explains the *per-hop* decision to use
on-ledger, off-ledger (payment channel), or "no ledger" (just trust).

On Wed, Jun 21, 2017 at 12:22 PM, Adrian Hope-Bailie <adrian@hopebailie.com>
wrote:

> I like it. Based on your description it sounds like there are 3 types of
> agreement, it would make sense to probabaly define each and also document
> the differences:
>
> 1. Agreement enforced by ledger
> 2. Agreement by sender to complete transfer upon receipt of preimage
> 3. Agreement by receiver to reverse transfer upon expiry
>
> I'd discourage use of 3 unless under specific circumstances because there
> are usually fees involved in a reversed transfer which complicates things a
> lot.
>
> On 21 June 2017 at 12:09, Evan Schwartz <evan@ripple.com> wrote:
>
>> What do you think about the term "Hashed Timelock Agreements (HTLAs)"?
>>
>> An HTLA is a generalization of the idea of a Hashed Timelock Contract
>> (HTLC), which is the Bitcoin/Lightning Network term for conditional
>> transfers where the conditions and timeouts are enforced by the ledger.
>>
>> In Interledger, you don't need all transfers to be enforced by the
>> ledger, because two parties can treat an unconditional transfer on a ledger
>> or through a simple payment channel as conditional. Basically, the two
>> parties are using an agreement based upon a hashlock and a timeout where
>> they say "if you give me the preimage to the hash before the timeout, I'll
>> send you the corresponding payment". In that case the recipient takes the
>> risk, but you could set up the agreement the other way where the sender
>> must send the amount upfront and the recipient will send the money back if
>> the transfer times out. Both parties can limit the amount of risk their
>> peer poses simply by capping the amount they are willing to have unsettled
>> or inflight.
>>
>> A key point about the security model is that if you use HTLAs to secure
>> multi-hop transfers (like both Interledger and Lightning do) it's up to
>> each pair of participants what type of agreement they want to use. If they
>> have very little trust and their ledger supports more complicated features,
>> maybe they want to use ledger-enforced HTLCs. If they are friends or have a
>> business relationship or their ledger doesn't support enforcing HTLCs then
>> a different type of HTLA would work just fine.
>>
>> What do you think? Does HTLA get the point across? (If this idea seems
>> interesting or could use more explanation I could write up a full blog post
>> about it)
>> --
>>
>> Evan Schwartz
>> Software Engineer
>> Managing Director of Ripple Luxembourg
>>
>
>