Privacy consolidate

[BullishNode]

The “privacy consolidate” button will do the following:

• Find all BTC utxos
• Create a swap for each BTC utxo to LBTC
• Allow user to review and accept total costs
• Initiate all the swaps
• Once all swaps complete, will swap back the LBTC amount to BTC
• Coins with same label can be merged in single swap

[DanGould]

Does this not make a very obvious temporal fingerprint on chain?

[BullishNode]

They could be scheduled broadcasts

[BullishNode]

@DanGould open to ideas on privacy-preserving consolidations! Of course a Payjoin might help here but prefer something that doesn't require manual coordination with a peer (looking for a 1-click thing).

To me the alternative is a regular consolidation which is orders of magnitude worse...

[DanGould]

Not suggesting payjoin is the move here in the slightest, but I raise the concern that a naive swap all to LBTC and then swap back isn't really any better than a regular consolidation because it's got a concrete fingerprint the same way a normal consolidation does. Plus you pay the swap fee, plus you're trusting the swap service not to reveal the cluster. Perhaps random timeouts between swaps is appropriate, but if they're not spread out across many blocks, I don't think the fingerprint still stands.

To me the alternative is a regular consolidation which is orders of magnitude worse...

I have a feeling this hasn't actually been quantified and is a gut feeling, which has value, but since the idea also introduces a trusted third party (the swap provider) who will 100% know about the consolidation and cost I think it's worth exploring quantities before making any sort of privacy promises to users.

[DanGould]

Just came to me while tweeting: If you did want to use payjoin for consolidation, instead of a swap service, you could queue up a consolidation to happen next time you receive a payjoin, so that a third party isn't sure where the line is around your cluster, but the sending counterparty would know (much like the swap service). I think this'd would work as a 1-click idea and could be improved by randomizing which coins get consolidated (potentially not all of them)

[pythcoiner]

I agree w/ @DanGould here, one shot swap are bad privacy wise, even w/ delayed broadcast.

IM) if we want something that really works for privacy I think it work considering a combo of:

• Random delays (attention must be paid if there is use of anti-sniping w/ timelocks, as it can leaks information about signing time)
• Not a dumb consolidation if there is a lot of coins (consolidate to multiples coins where value is not a sum of the consolidated coins)
• Possibly spliting amounts between chains ( keep some amount on liquid side so it makes it even harder to correlate amounts)
• Possibly combining w/ a payment (or send to cold storage)

[BullishNode]

Closing as duplicate of #1270. Privacy consolidate and consolidate are the same feature.

[BullishNode]

Reopening - this was incorrectly marked as duplicate of #1270. 'Privacy consolidate' (multi-swap BTC->LBTC->BTC) is a distinct feature from 'Consolidate' (simple max spend to single address). Apologies for the error.