Fixing Multiparty Channel Factories with OP_CHECKSEPARATESIG and Actuaries

Fixing Multiparty Channel Factories with OP_CHECKSEPARATESIG and Actuaries

Exploring New Possibilities in the Blockchain Industry

The blockchain industry has been revolutionizing various sectors, and one of the most promising areas is the development of off-chain channels. However, the limitations of two-party off-chain channels, such as the Lightning Network, have brought attention to the need for exploring designs with multiple participants. This direction in scaling presents new trade-offs and challenges that require innovative solutions. In this article, we will delve into the intricacies of multiparty channels, the interactivity requirement, and the proposed solution of OP_CHECKSEPARATESIG.

The Challenge of Multiparty Channels

When transitioning from two-party channels to multiparty channels with more than two participants, a significant challenge arises: the interactivity requirement. With ten people sharing control of one Unspent Transaction Output (UTXO) in a single channel, all ten parties need to be online simultaneously to update the state of the channel. This coordination problem surpasses the current implementation of two-party Lightning channels, where only two participants need to be online for channel usage.

To address the interactivity challenge, the best current approach involves introducing trust into the system through a federation. In Lightning and future multiparty channel systems, a self-custodial setup is established. The multisig holding funds on-chain requires the signatures of all participants to modify the state of off-chain funds. If any member refuses to sign a new update, it becomes impossible to reassign the funds without their consent. While this model provides security similar to sole custody on the mainchain, reducing the key threshold from n-of-n to m-of-n compromises this security equivalence.


ZmnSCPxj has proposed a fascinating solution to the interactivity problem: OP_CHECKSEPARATESIG. This proposal necessitates two soft forks, namely SIGHASH_ANYPREVOUT and OP_CHECKSEPARATESIG. The latter has gained considerable consensus as a desirable change, largely due to its minimal scope and simplicity.

Currently, Bitcoin script primarily verifies signatures using OP_CHECKSIG and OP_CHECKSIGVERIFY. These verification operations consider the S and r values of the signature as a single argument, along with the public key to verify against. On the other hand, OP_CHECKSEPARATESIG takes the public key, r value, and S value as separate arguments, verifying the signature accordingly.

The proposal primarily focuses on the separation of arguments in signature verification. By introducing OP_CHECKSEPARATESIG, the verification process becomes more flexible and enables new possibilities for multiparty channels.

State Updates Without Everyone Online

The introduction of OP_CHECKSEPARATESIG addresses the challenge of state updates in multiparty channels when not all participants are online. Let’s envision a basic multiparty channel with Alice, Bob, and Charlie sharing control of a UTXO through a pre-signed transaction. If Alice wants to pay Bob while Charlie is offline, she must create a pre-signed transaction that splits the funds between herself and Bob.

However, this arrangement presents a problem. Alice can sign a conflicting transaction, reclaiming the payment to Bob, and use it before Charlie comes online and updates the channel. Due to the solo requirement of Alice’s key for this action, Bob is defenseless against double-spending.

To overcome this challenge, an arbitrator known as the Actuary can be introduced. The Actuary’s key becomes a necessary component for approving any transactions spending Alice, Bob, or Charlie’s outputs. However, this introduces a trust issue, as Bob must now rely on the Actuary instead of Alice. If the Actuary colludes with Alice, Bob can still be double-spent.

The proposed solution involving OP_CHECKSEPARATESIG mitigates the trust concern. By pre-defining the r value in the Actuary’s signature, the Actuary’s role can be effectively enforced without the need for absolute trust. Moreover, by confiscating the bond associated with the Actuary’s key if they collaborate to double-spend, a stronger guarantee against malicious activities can be established.

Enhancing Security and Flexibility with OP_CHECKSEPARATESIG

With the Actuary’s involvement and the utilization of OP_CHECKSEPARATESIG, multiparty channels can update their state even when not all participants are online. Although this solution may not achieve strict trustlessness, it brings the industry closer to that goal. Participants like Bob can have a strong guarantee against double-spending, providing them with a level of security close to 100%. Furthermore, Alice can make payments with sufficient guarantees even when Charlie is offline.

The implications of OP_CHECKSEPARATESIG go beyond multiparty channels. This proposal offers a viable solution to address various scenarios requiring bond-enforced restrictions to ensure parties only sign specific versions of transactions. Bitcoiners should seriously consider integrating OP_CHECKSEPARATESIG, as it provides a simple yet effective solution to a known problem without adding complexity to the system.

In conclusion, the blockchain industry continues to evolve, and new possibilities are being explored to overcome the limitations of off-chain channels. With innovations like multiparty channels and the introduction of OP_CHECKSEPARATESIG, the industry moves one step closer to achieving scalable and secure solutions. The journey towards a trustless future is an ongoing endeavor, and with each advancement, the blockchain industry strengthens its position as a transformative force in various sectors.

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