Incentives And Preventing Abuse

Blacklisting also prevents abuse in the case where Alice and Bob are the same financial entity, with shared cost incentives. The goal in this case is to limit the amount of free relay that Alice and Bob are able to extract from the network.

Bob's node is able to see which relays do not result in valid payment, and adjust the reputation of both Alice and Bob accordingly. After a small number of failures to deliver payment, Bob's node can blacklist Bob, and decrease Alice’s reputation as a relay sender, eventually resulting in the node ignoring relay requests from Alice altogether.

In the worst case attack, the attacker spins up many alternative receiving peers (for free) that scan to a variety of different nodes, sending relay to each of these peers in turn. This continues until Alice’s reputation has been “spent” with all nodes on the network. With 100 nodes on the network, and 50 relays worth of non-payment evidence required for the node to blacklist A (an allowance for legitimate connection issues), this results in 5000 free relays before all nodes will turn away Alice’s requests - about $0.00005 worth of relay, based on monthly node operating costs and throughput.

After this, Alice’s escrow must be moved to another wallet to begin the process again, which takes time for the escrow to unlock, and has an associated gas cost. This gas cost puts an effective price on the “free” relay obtainable this way, and makes the strategy of repeatedly spinning up new sending peers worse than just paying for relay in the first place.