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Moderate 60 Bitcoin

Release LSPS2 intercepted HTLCs on open failure

Public commit record

What the developer wrote

Authored by Elias Rohrer

68/100 · Adequate
Release LSPS2 intercepted HTLCs on open failure

When a JIT channel open fails, release queued intercepted HTLCs through the intercept API so they are not held until expiry. Keep resetting the LSPS2 state if an intercept has already been released.

Co-Authored-By: HAL 9000

This finding was discovered by Project Loupe
✓ Descriptive subject✓ Names a concrete action or component✓ Provides detailed explanatory context
The short version

What changed, and why it matters

This commit fixes a bug in the Lightning Dev Kit's LSPS2 (JIT channel) service. When a just-in-time (JIT) channel opening failed, intercepted HTLCs (pending payments held for that channel) were not being released back through the intercept API. They could sit until their expiry timeout, tying up funds and potentially causing payment failures or liquidity problems. The fix releases those held payments immediately when the channel open fails, and also handles the case where an intercept was already released by resetting the LSPS2 state anyway.

Recommended action

Review and merge the patch; ensure downstream users running LSPS2 service code update to a release containing this commit. Monitor for any related issues with HTLCs stuck on failed JIT opens in prior versions.

Security signals we found

01

Denial-of-service / liquidity lock-up: intercepted HTLCs held until expiry on JIT open failure

02

Incorrect HTLC release API used: fail_htlc_backwards_with_reason vs fail_intercepted_htlc

03

State cleanup bug in LSPS2 service on channel open failure

04

New regression test added to enforce correct cleanup behavior

Risk score

Why this scored 60/100

Our methodology →
Potential impact 18/30
Exploitability 12/25
Stealth signal 8/15
Affected reach 10/15
Confidence 8/10
Evidence quality 4/5
Human-validated context

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