Lightning Network (LN) is the most deployed Bitcoin-compatible Payment Channel Network (PCN), ensuring faster execution of transactions. However, this Layer-two solution has its fair share of problems. Topological analysis on Lightning Network reveals that Griefing Attack is a major problem whereby an adversary intentionally exhausts the channel capacity of the network. It can be used for mounting series of targeted attacks like Denial-of-Service Attack, Node Isolation Attack and Channel Exhaustion Attack on honest participants as well. Though the attack does not always result in a direct monetary gain of the attacker, blocking of channel capacity for several days prevents several nodes from processing any future transaction request, leading to substantial collateral damage. If the attacker is able to lock funds in multiple paths simultaneously, then a major portion of the network may get stalled, reducing the throughput. Mitigating Griefing Attack still remains an open problem. In this paper, we propose an efficient countermeasure for the attack, known as Griefing-Penalty. Mounting such an attack requires the attacker to pay a penalty proportional to the collateral cost of executing a payment. The penalty is used for compensating parties who incurred loss by locking funds. To realize it, we propose a new payment protocol HTLC-GP or Hashed Timelock Contract with Griefing-Penalty. It not only preserves privacy but also ensures that an attacker cannot ascribe blame on any honest party present in the path relaying the payment. We evaluate the effectiveness of griefing-penalty using two attacking strategies and test it on several snapshots of Lightning Network. Our evaluation results show that average revenue earned by the attacker after mounting the attack decreases substantially for HTLC-GP as compared to HTLC.
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