boltz-rust

Script

This requires building a one-time use and dispose wallet for the following bitcoin script:

BOLTZ NORMAL SWAP: p2shwsh

    HASH160 <hash of the preimage> 
    EQUAL
    IF <receiver public key>
    ELSE <timeout block height> 
    CHECKLOCKTIMEVERIFY
    DROP <sender public key> 
    ENDIF
    CHECKSIG

BOLTZ REVERSE SWAP: p2sh

    SIZE
    [32]
    EQUAL
    IF
    HASH160 <hash of the preimage>
    EQUALVERIFY <receiver public key>
    ELSE
    DROP <timeout block height>
    CLTV
    DROP <sender public key> 
    ENDIF
    CHECKSIG

This script captures the following spending conditions:

Either; a preimage and the receiver's signature is required // happy case (claimTx)
Or; after a timeout the senders signature is required. // dispute (refundTx)

The receiver will be able to claim the funds on-chain, We are the receiver in case of a reverse swap and this would be boltz in case of a normal swap.

The sender will be able to claim funds on LN, once the receiver claims the on-chain funds and reveals the preimage. We are the sender in the case of a normal swap, and boltz in the case of a reverse swap.

Procedure

There is no requirement for a database as we will not persist and data.

We simply create keys, build a script, generate a single address corresponding to this key, watch the address for payment and spend the utxo by building a transaction, solving the spending conditions and broadcasting. We do not need to store transaction history or address indexes etc. This has to be handled by the client.

The client must ensure that they are rotating the keys and preimages being used. There are helper structs and methods for this.

In the case of normal swaps; In the happy case, everything goes well, boltz pays our invoice and claims the on-chain funds. The client (us) will ONLY be required to create the swap script and spend it in case boltz cheats and we need to claim back funds onchain from the script after a timeout. We would be the sender; and can only spend after a timeout in case of a dispute.

In the case of reverse swaps; In the happy case, the client (us) will ALWAYS be required to build and spend from the script to claim on-chain funds. We would be the receiver, and the solution we have to create for the reverse swap is the preimageof a hashand a `signature from our key.

For the most part, normal swaps only require interaction with the boltz.exchange API, making it quite straightforward. In case of a dispute, we need to claim back funds from the on-chain script we funded, for which, we will need to build the script and spend it (refund tx).

For the sake of unifying the implementation challenge, we will look at the standard procedure when doing a reverse swap happy case.

• Create a keypair.{seckey,pubkey}
• Create a random secret (preimage)
• Create hash=sha256(preimage)
• Share keypair.pubkey and hash with boltz.exchange
• Boltz will use use this to create the script on their end and send it back to us as a redeem_script along with an LN invoice for us to pay and an onchain address that they will fund for us to claim
• Boltz will also return their pubkey and the timeout used
• verify the response from Boltz and the preimage used in the invoice (boltz cannot claim the invoice until the preimage is known)
• build the script on our end using: our_pubkey, hash, boltz_pubkey and timeout
• generate the address from the script and check for a match against the address provided by boltz
• ensure our script matches the redeemScript provided by boltz
• pay the invoice (use local clightning)
• Boltz will confirm invoice paid and send funds to the address creating a utxo that we can spend
• construct a transaction/psbt to spend this utxo
• solve spending conditions: hashlock + signature
• sweep the utxo to your existing bitcoin wallet
• once the utxo is spent, the preimage is publically revealed and boltz can now claim the invoice

Liquid

The procedure for liquid is the same as Bitcoin, with the addition of blinding logic associated with Asset and Value

Core Libraries/API

• boltz
• bitcoin
• elements
• lightning-invoice
• electrum-client

Resources

• teleport A Proof of Concept on-chain utxo swap protocol.

• bitcoin-wallet A simple rust bitcoin wallet

• rust-bitcoin-wallet Another old simple rust bitcoin wallet - only upto Psbt building

• boltz Boltz-core - solving the claim script

• tdryja-ct Tadge Dryja's MIT Opencourseware presentation on Confidential Transactions

• elements Docs from main elements repo on confidential transactions

test

The best place to start diving into this repo is tests directory. This contains integration tests for bitcoin and liquid.

They contain the entire example of usage of the library.

Run all tests, except ignored tests

./test # test helper script
# OR MANUALLY
cargo test
cargo test -- --nocapture # for println! logs

ignored tests

To run the complete reverse swap integration test:

cargo test test_rsi -- --nocapture --include-ignored

test_rsi is interactive. It will block the terminal and prompt you to pay an ln invoice to proceed.

cargo test test_normal_swap -- --nocapture --include-ignored

test_normal_swap is ignored since it requires always using a new invoice or else it errors with 409

So when manually testing, make sure you update the invoice variable.

For all ignored unit tests read the tests before running.

connecting a ln testnet channel with boltz

It's better to connect directly to boltz for testing to ensure payment routes are guaranteed.

Use botlz's 02* channel for testing with small amounts.

export FUND=2100000
lightning-cli --lightning-dir=/.lightning connect 029040945df331e634fba152ce6a21e3dfca87b68d275e078caeee4753f43e9acb 212.46.38.66:9736
lightning-cli --lightning-dir=/.lightning fundchannel 029040945df331e634fba152ce6a21e3dfca87b68d275e078caeee4753f43e9acb $FUND

Milestones

• NormalSwap (BTC): Claim (Invoice paid)
• NormalSwap (BTC): Refund
• ReverseSwap (BTC): Claim
• ReverseSwap (BTC): Refund (Invoice expires)
• NormalSwap (L-BTC): Claim (Invoice paid)
• NormalSwap (L-BTC): Refund
• ReverseSwap (L-BTC): Claim
• ReverseSwap (L-BTC): Refund (Invoice expires)

Assumptions

This library makes the following assumptions:

• Reverse swaps spend only 1 utxo

In bitcoin, we use listunspent and take the first utxo only (array 0 index). The only case where something could go wrong here is if the script at any point has more than one utxo, which is unlikely. Boltz will always fund the script address with the entire amount.

When we fetch utxos now, we expect a single utxo funded with the exact amount of the swap. If the amount does not match or if there is more than one utxo, we do not claim the transaction.

An improvement on this is to make the utxos field in SwapTx use a Vec and make sweeps always use all available/spendable utxos. We should also ensure that the amount is equal to or more than the value of the swap and accordingly notify the user of the unexpected amount.

• Bitcoin reverse swap sweep/drain is 1 output

• Liquid reverse swap sweep/drain is 1 confidential output and 1 explicit fee output

• Liquid reverse swap utxo is always confidential If boltz funds the swap script with Explicit values, the library will error. It currently only handles Confidential transactions.

Acknowledgment

This library is developed and maintained by Bull Bitcoin (www.bullbitcoin.com).

Special thanks to:

• michael1011 for guidance on implementation and swaps
• stratospher for contributions and pairing with us through understanding liquid confidential transactions
• RCasatta for guidance on liquid