lightning community – How the is the refund transaction in Uneven Revocable Commitments constructed?

If you first create the channel, the very first thing Hitesh and Irene do is signal the preliminary commitments, which assigns the preliminary steadiness to themselves. That is what is known as the refund, as a result of if one of many events resolve to not proceed, the cash returns to the homeowners. This transaction is a traditional dedication transaction however is created as a result of if not, the funds could possibly be locked ceaselessly on a multisig if one of many events of the channel disappears!

First two examples

The primary two examples are dedication transactions created. Every person creates one dedication transaction with two outputs. In these, each Hitesh and Irene have two outputs:

1. The primary output is a fee to the opposite individual of the preliminary
   steadiness (5 BTC).
2. The second output is a fee to the identical individual making the
   dedication however with a locktime of 1000 blocks. (The locktime goes there, not within the refund!)
   This dedication will not be broadcasted, every one of many events has his personal model. Every one of many events at any second can signal it and broadcast it. In that case the opposite individual would obtain the 5 BTC immediately and the individual accountable for the printed should wait 1000 blocks.

Be aware that this dedication transactions are incomplete because the penalty mechanism is lacking in case some occasion tries to cheat. Within the ebook they present this uncompleted model to offer an thought of the way it appears to be like

Third instance

This final instance exhibits how you can create an actual dedication transaction with the penalty mechanism included.

It provides a situation which permits a person to retrieve the funds of the second output if it has the revocation personal key. The revocation secret is a key which each events can calculate the general public key, however they will solely get half of the personal key. So that they solely have half of the personal key. If at any second, one of many two customers has the 2 halfs of the personal key, it might declare the funds within the second output.

If the channel state is up to date and a brand new dedication transaction is created, they trade their half of the revocation personal key. This provides them the safety that if the opposite individual cheats and broadcast an outdated dedication transaction, the sufferer will be capable of declare the opposite individual the funds as a punishment.

Think about Hitesh tries to cheat; since Irene can declare his 5 BTC immediately (output 1), and Hitesh has to attend 1000 blocks to get the 5 BTC, Irene can declare Hitesh cash as she has the total revocation personal key (that is the brand new situation we added within the third instance).

Be aware that if Irene does not declare the funds earlier than 1000 blocks Hitesh will be capable of proceed and declare himself the cash.

Abstract

In order a abstract, dedication transactions appear like the third instance because the penalty mechanism is required. Refund transaction is simply the primary dedication transaction that simply returns the funds to the customers. The penalty mechanism can also be wanted there as a result of in case you do not add it you can cheat and steal cash by broadcasting the refund transaction sooner or later when the channel state has superior.