Re: Hashed Timelock Agreements (HTLAs)

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
>