Introduce Payment Dummy Hop parsing mechanism

diff --git a/lightning/src/blinded_path/payment.rs b/lightning/src/blinded_path/payment.rs
index f0bf3f9..b68be81 100644
--- a/lightning/src/blinded_path/payment.rs
+++ b/lightning/src/blinded_path/payment.rs
@@ -33,7 +33,6 @@ use crate::util::ser::{
 	Writeable, Writer,
 };
 
-use core::mem;
 use core::ops::Deref;
 
 #[allow(unused_imports)]
@@ -248,28 +247,31 @@ impl BlindedPaymentPath {
 		NL::Target: NodeIdLookUp,
 		T: secp256k1::Signing + secp256k1::Verification,
 	{
-		match self.decrypt_intro_payload::<NS>(node_signer) {
-			Ok((
-				BlindedPaymentTlvs::Forward(ForwardTlvs { short_channel_id, .. }),
-				control_tlvs_ss,
-			)) => {
-				let next_node_id = match node_id_lookup.next_node_id(short_channel_id) {
-					Some(node_id) => node_id,
-					None => return Err(()),
-				};
-				let mut new_blinding_point = onion_utils::next_hop_pubkey(
-					secp_ctx,
-					self.inner_path.blinding_point,
-					control_tlvs_ss.as_ref(),
-				)
-				.map_err(|_| ())?;
-				mem::swap(&mut self.inner_path.blinding_point, &mut new_blinding_point);
-				self.inner_path.introduction_node = IntroductionNode::NodeId(next_node_id);
-				self.inner_path.blinded_hops.remove(0);
-				Ok(())
-			},
-			_ => Err(()),
-		}
+		let (next_node_id, control_tlvs_ss) =
+			match self.decrypt_intro_payload::<NS>(node_signer).map_err(|_| ())? {
+				(BlindedPaymentTlvs::Forward(ForwardTlvs { short_channel_id, .. }), ss) => {
+					let node_id = node_id_lookup.next_node_id(short_channel_id).ok_or(())?;
+					(node_id, ss)
+				},
+				(BlindedPaymentTlvs::Dummy(_), ss) => {
+					let node_id = node_signer.get_node_id(Recipient::Node)?;
+					(node_id, ss)
+				},
+				_ => return Err(()),
+			};
+
+		let new_blinding_point = onion_utils::next_hop_pubkey(
+			secp_ctx,
+			self.inner_path.blinding_point,
+			control_tlvs_ss.as_ref(),
+		)
+		.map_err(|_| ())?;
+
+		self.inner_path.blinding_point = new_blinding_point;
+		self.inner_path.introduction_node = IntroductionNode::NodeId(next_node_id);
+		self.inner_path.blinded_hops.remove(0);
+
+		Ok(())
 	}
 
 	pub(crate) fn decrypt_intro_payload<NS: Deref>(
@@ -291,9 +293,9 @@ impl BlindedPaymentPath {
 				.map_err(|_| ())?;
 
 		match (&readable, used_aad) {
-			(BlindedPaymentTlvs::Forward(_), false) | (BlindedPaymentTlvs::Receive(_), true) => {
-				Ok((readable, control_tlvs_ss))
-			},
+			(BlindedPaymentTlvs::Forward(_), false)
+			| (BlindedPaymentTlvs::Dummy(_), true)
+			| (BlindedPaymentTlvs::Receive(_), true) => Ok((readable, control_tlvs_ss)),
 			_ => Err(()),
 		}
 	}
diff --git a/lightning/src/ln/channelmanager.rs b/lightning/src/ln/channelmanager.rs
index aef57a6..b55b179 100644
--- a/lightning/src/ln/channelmanager.rs
+++ b/lightning/src/ln/channelmanager.rs
@@ -4974,6 +4974,11 @@ where
 	) -> Result<(), LocalHTLCFailureReason> {
 		let outgoing_scid = match next_packet_details.outgoing_connector {
 			HopConnector::ShortChannelId(scid) => scid,
+			HopConnector::Dummy => {
+				// Dummy hops are only used for path padding and must not reach HTLC processing.
+				debug_assert!(false, "Dummy hop reached HTLC handling.");
+				return Err(LocalHTLCFailureReason::InvalidOnionPayload);
+			}
 			HopConnector::Trampoline(_) => {
 				return Err(LocalHTLCFailureReason::InvalidTrampolineForward);
 			}
@@ -6878,6 +6883,7 @@ where
 	fn process_pending_update_add_htlcs(&self) -> bool {
 		let mut should_persist = false;
 		let mut decode_update_add_htlcs = new_hash_map();
+		let mut dummy_update_add_htlcs = new_hash_map();
 		mem::swap(&mut decode_update_add_htlcs, &mut self.decode_update_add_htlcs.lock().unwrap());
 
 		let get_htlc_failure_type = |outgoing_scid_opt: Option<u64>, payment_hash: PaymentHash| {
@@ -6941,7 +6947,36 @@ where
 						&*self.logger,
 						&self.secp_ctx,
 					) {
-						Ok(decoded_onion) => decoded_onion,
+						Ok(decoded_onion) => match decoded_onion {
+							(
+								onion_utils::Hop::Dummy {
+									dummy_hop_data,
+									next_hop_hmac,
+									new_packet_bytes,
+									..
+								},
+								Some(next_packet_details),
+							) => {
+								let new_update_add_htlc =
+									onion_utils::peel_dummy_hop_update_add_htlc(
+										update_add_htlc,
+										dummy_hop_data,
+										next_hop_hmac,
+										new_packet_bytes,
+										next_packet_details,
+										&*self.node_signer,
+										&self.secp_ctx,
+									);
+
+								dummy_update_add_htlcs
+									.entry(incoming_scid_alias)
+									.or_insert_with(Vec::new)
+									.push(new_update_add_htlc);
+
+								continue;
+							},
+							_ => decoded_onion,
+						},
 
 						Err((htlc_fail, reason)) => {
 							let failure_type = HTLCHandlingFailureType::InvalidOnion;
@@ -6954,6 +6989,13 @@ where
 				let outgoing_scid_opt =
 					next_packet_details_opt.as_ref().and_then(|d| match d.outgoing_connector {
 						HopConnector::ShortChannelId(scid) => Some(scid),
+						HopConnector::Dummy => {
+							debug_assert!(
+								false,
+								"Dummy hops must never be processed at this stage."
+							);
+							None
+						},
 						HopConnector::Trampoline(_) => None,
 					});
 				let shared_secret = next_hop.shared_secret().secret_bytes();
@@ -7097,6 +7139,19 @@ where
 				));
 			}
 		}
+
+		// Merge peeled dummy HTLCs into the existing decode queue so they can be
+		// processed in the next iteration. We avoid replacing the whole queue
+		// (e.g. via mem::swap) because other threads may have enqueued new HTLCs
+		// meanwhile; merging preserves everything safely.
+		if !dummy_update_add_htlcs.is_empty() {
+			let mut decode_update_add_htlc_source = self.decode_update_add_htlcs.lock().unwrap();
+
+			for (incoming_scid_alias, htlcs) in dummy_update_add_htlcs.into_iter() {
+				decode_update_add_htlc_source.entry(incoming_scid_alias).or_default().extend(htlcs);
+			}
+		}
+
 		should_persist
 	}
 
diff --git a/lightning/src/ln/onion_payment.rs b/lightning/src/ln/onion_payment.rs
index c1d07f7..9e8672a 100644
--- a/lightning/src/ln/onion_payment.rs
+++ b/lightning/src/ln/onion_payment.rs
@@ -494,7 +494,7 @@ where
 	L::Target: Logger,
 {
 	let (hop, next_packet_details_opt) =
-		decode_incoming_update_add_htlc_onion(msg, node_signer, logger, secp_ctx
+		decode_incoming_update_add_htlc_onion(msg, &*node_signer, &*logger, secp_ctx
 	).map_err(|(msg, failure_reason)| {
 		let (reason, err_data) = match msg {
 			HTLCFailureMsg::Malformed(_) => (failure_reason, Vec::new()),
@@ -532,6 +532,29 @@ where
 			// onion here and check it.
 			create_fwd_pending_htlc_info(msg, hop, shared_secret.secret_bytes(), Some(next_packet_pubkey))?
 		},
+		onion_utils::Hop::Dummy { dummy_hop_data, next_hop_hmac, new_packet_bytes, .. } => {
+			let next_packet_details = match next_packet_details_opt {
+				Some(next_packet_details) => next_packet_details,
+				// Dummy Hops should always include the next hop details
+				None => return Err(InboundHTLCErr {
+					msg: "Failed to decode update add htlc onion",
+					reason: LocalHTLCFailureReason::InvalidOnionPayload,
+					err_data: Vec::new(),
+				}),
+			};
+
+			let new_update_add_htlc = onion_utils::peel_dummy_hop_update_add_htlc(
+				msg,
+				dummy_hop_data,
+				next_hop_hmac,
+				new_packet_bytes,
+				next_packet_details,
+				&*node_signer,
+				secp_ctx
+			);
+
+			peel_payment_onion(&new_update_add_htlc, node_signer, logger, secp_ctx, cur_height, allow_skimmed_fees)?
+		},
 		_ => {
 			let shared_secret = hop.shared_secret().secret_bytes();
 			create_recv_pending_htlc_info(
@@ -545,6 +568,8 @@ where
 pub(super) enum HopConnector {
 	// scid-based routing
 	ShortChannelId(u64),
+	// Dummy hop for path padding
+	Dummy,
 	// Trampoline-based routing
 	#[allow(unused)]
 	Trampoline(PublicKey),
@@ -649,6 +674,22 @@ where
 				outgoing_cltv_value
 			})
 		}
+		onion_utils::Hop::Dummy { dummy_hop_data: msgs::InboundOnionDummyPayload { ref payment_relay, ref payment_constraints, .. },  shared_secret, .. } => {
+			let (amt_to_forward, outgoing_cltv_value) = match check_blinded_forward(
+				msg.amount_msat, msg.cltv_expiry, &payment_relay, &payment_constraints, &BlindedHopFeatures::empty()
+			) {
+				Ok((amt, cltv)) => (amt, cltv),
+				Err(()) => {
+					return encode_relay_error("Underflow calculating outbound amount or cltv value for blinded forward",
+						LocalHTLCFailureReason::InvalidOnionBlinding, shared_secret.secret_bytes(), None, &[0; 32]);
+				}
+			};
+
+			let next_packet_pubkey = onion_utils::next_hop_pubkey(secp_ctx,
+				msg.onion_routing_packet.public_key.unwrap(), &shared_secret.secret_bytes());
+
+			Some(NextPacketDetails { next_packet_pubkey, outgoing_connector: HopConnector::Dummy, outgoing_amt_msat: amt_to_forward, outgoing_cltv_value })
+		}
 		onion_utils::Hop::TrampolineForward { next_trampoline_hop_data: msgs::InboundTrampolineForwardPayload { amt_to_forward, outgoing_cltv_value, next_trampoline }, trampoline_shared_secret, incoming_trampoline_public_key, .. } => {
 			let next_trampoline_packet_pubkey = onion_utils::next_hop_pubkey(secp_ctx,
 				incoming_trampoline_public_key, &trampoline_shared_secret.secret_bytes());
diff --git a/lightning/src/ln/onion_utils.rs b/lightning/src/ln/onion_utils.rs
index 7e87954..b82c60a 100644
--- a/lightning/src/ln/onion_utils.rs
+++ b/lightning/src/ln/onion_utils.rs
@@ -14,7 +14,8 @@ use crate::crypto::streams::ChaChaReader;
 use crate::events::HTLCHandlingFailureReason;
 use crate::ln::channel::TOTAL_BITCOIN_SUPPLY_SATOSHIS;
 use crate::ln::channelmanager::{HTLCSource, RecipientOnionFields};
-use crate::ln::msgs::{self, DecodeError};
+use crate::ln::msgs::{self, DecodeError, InboundOnionDummyPayload, OnionPacket, UpdateAddHTLC};
+use crate::ln::onion_payment::{HopConnector, NextPacketDetails};
 use crate::offers::invoice_request::InvoiceRequest;
 use crate::routing::gossip::NetworkUpdate;
 use crate::routing::router::{BlindedTail, Path, RouteHop, RouteParameters, TrampolineHop};
@@ -2356,6 +2357,12 @@ where
 						new_packet_bytes,
 					})
 				},
+				msgs::InboundOnionPayload::Dummy(dummy_hop_data) => Ok(Hop::Dummy {
+					dummy_hop_data,
+					shared_secret,
+					next_hop_hmac,
+					new_packet_bytes,
+				}),
 				_ => {
 					if blinding_point.is_some() {
 						return Err(OnionDecodeErr::Malformed {
@@ -2533,6 +2540,61 @@ where
 	}
 }
 
+/// Peels a single dummy hop from an inbound `UpdateAddHTLC` by reconstructing the next
+/// onion packet and HTLC state.
+///
+/// This helper is used when processing dummy hops in a blinded path. Dummy hops are not
+/// forwarded on the network; instead, their onion layer is removed locally and a new
+/// `UpdateAddHTLC` is constructed with the next onion packet and updated amount/CLTV
+/// values.
+///
+/// This function performs no validation and does not enqueue or forward the HTLC.
+/// It only reconstructs the next `UpdateAddHTLC` for further local processing.
+pub(super) fn peel_dummy_hop_update_add_htlc<NS: Deref, T: secp256k1::Verification>(
+	msg: &UpdateAddHTLC, dummy_hop_data: InboundOnionDummyPayload, next_hop_hmac: [u8; 32],
+	new_packet_bytes: [u8; ONION_DATA_LEN], next_packet_details: NextPacketDetails,
+	node_signer: NS, secp_ctx: &Secp256k1<T>,
+) -> UpdateAddHTLC
+where
+	NS::Target: NodeSigner,
+{
+	let NextPacketDetails {
+		next_packet_pubkey,
+		outgoing_amt_msat,
+		outgoing_connector,
+		outgoing_cltv_value,
+	} = next_packet_details;
+
+	debug_assert!(
+		matches!(outgoing_connector, HopConnector::Dummy),
+		"Dummy hop must always map to HopConnector::Dummy"
+	);
+
+	let next_blinding_point = dummy_hop_data
+		.intro_node_blinding_point
+		.or(msg.blinding_point)
+		.and_then(|blinding_point| {
+			let ss = node_signer.ecdh(Recipient::Node, &blinding_point, None).ok()?.secret_bytes();
+
+			next_hop_pubkey(secp_ctx, blinding_point, &ss).ok()
+		});
+
+	let new_onion_packet = OnionPacket {
+		version: 0,
+		public_key: next_packet_pubkey,
+		hop_data: new_packet_bytes,
+		hmac: next_hop_hmac,
+	};
+
+	UpdateAddHTLC {
+		onion_routing_packet: new_onion_packet,
+		blinding_point: next_blinding_point,
+		amount_msat: outgoing_amt_msat,
+		cltv_expiry: outgoing_cltv_value,
+		..msg.clone()
+	}
+}
+
 /// Build a payment onion, returning the first hop msat and cltv values as well.
 /// `cur_block_height` should be set to the best known block height + 1.
 pub fn create_payment_onion<T: secp256k1::Signing>(