lnd.xprv/htlcswitch/link.go

package htlcswitch

import (
	"bytes"
	"fmt"
	"sync"
	"sync/atomic"
	"time"

	"io"

	"crypto/sha256"

	"github.com/go-errors/errors"
	"github.com/lightningnetwork/lnd/chainntnfs"
	"github.com/lightningnetwork/lnd/channeldb"
	"github.com/lightningnetwork/lnd/contractcourt"
	"github.com/lightningnetwork/lnd/lnwallet"
	"github.com/lightningnetwork/lnd/lnwire"
	"github.com/roasbeef/btcd/chaincfg/chainhash"
	"github.com/roasbeef/btcutil"
)

const (
	// expiryGraceDelta is a grace period that the timeout of incoming
	// HTLC's that pay directly to us (i.e we're the "exit node") must up
	// hold. We'll reject any HTLC's who's timeout minus this value is less
	// that or equal to the current block height. We require this in order
	// to ensure that if the extending party goes to the chain, then we'll
	// be able to claim the HTLC still.
	//
	// TODO(roasbeef): must be < default delta
	expiryGraceDelta = 2
)

// ForwardingPolicy describes the set of constraints that a given ChannelLink
// is to adhere to when forwarding HTLC's. For each incoming HTLC, this set of
// constraints will be consulted in order to ensure that adequate fees are
// paid, and our time-lock parameters are respected. In the event that an
// incoming HTLC violates any of these constraints, it is to be _rejected_ with
// the error possibly carrying along a ChannelUpdate message that includes the
// latest policy.
type ForwardingPolicy struct {
	// MinHTLC is the smallest HTLC that is to be forwarded. This is
	// set when a channel is first opened, and will be static for the
	// lifetime of the channel.
	MinHTLC lnwire.MilliSatoshi

	// BaseFee is the base fee, expressed in milli-satoshi that must be
	// paid for each incoming HTLC. This field, combined with FeeRate is
	// used to compute the required fee for a given HTLC.
	BaseFee lnwire.MilliSatoshi

	// FeeRate is the fee rate, expressed in milli-satoshi that must be
	// paid for each incoming HTLC. This field combined with BaseFee is
	// used to compute the required fee for a given HTLC.
	FeeRate lnwire.MilliSatoshi

	// TimeLockDelta is the absolute time-lock value, expressed in blocks,
	// that will be subtracted from an incoming HTLC's timelock value to
	// create the time-lock value for the forwarded outgoing HTLC. The
	// following constraint MUST hold for an HTLC to be forwarded:
	//
	//  * incomingHtlc.timeLock - timeLockDelta = fwdInfo.OutgoingCTLV
	//
	//    where fwdInfo is the forwarding information extracted from the
	//    per-hop payload of the incoming HTLC's onion packet.
	TimeLockDelta uint32

	// TODO(roasbeef): add fee module inside of switch
}

// ExpectedFee computes the expected fee for a given htlc amount. The value
// returned from this function is to be used as a sanity check when forwarding
// HTLC's to ensure that an incoming HTLC properly adheres to our propagated
// forwarding policy.
//
// TODO(roasbeef): also add in current available channel bandwidth, inverse
// func
func ExpectedFee(f ForwardingPolicy, htlcAmt lnwire.MilliSatoshi) lnwire.MilliSatoshi {

	// TODO(roasbeef): write some basic table driven tests
	return f.BaseFee + (htlcAmt*f.FeeRate)/1000000
}

// Ticker is an interface used to wrap a time.Ticker in a struct,
// making mocking it easier.
type Ticker interface {
	Start() <-chan time.Time
	Stop()
}

// BatchTicker implements the Ticker interface, and wraps a time.Ticker.
type BatchTicker struct {
	ticker *time.Ticker
}

// NewBatchTicker returns a new BatchTicker that wraps the passed
// time.Ticker.
func NewBatchTicker(t *time.Ticker) *BatchTicker {
	return &BatchTicker{t}
}

// Start returns the tick channel for the underlying time.Ticker.
func (t *BatchTicker) Start() <-chan time.Time {
	return t.ticker.C
}

// Stop stops the underlying time.Ticker.
func (t *BatchTicker) Stop() {
	t.ticker.Stop()
}

// ChannelLinkConfig defines the configuration for the channel link. ALL
// elements within the configuration MUST be non-nil for channel link to carry
// out its duties.
type ChannelLinkConfig struct {
	// FwrdingPolicy is the initial forwarding policy to be used when
	// deciding whether to forwarding incoming HTLC's or not. This value
	// can be updated with subsequent calls to UpdateForwardingPolicy
	// targeted at a given ChannelLink concrete interface implementation.
	FwrdingPolicy ForwardingPolicy

	// Switch is a subsystem which is used to forward the incoming HTLC
	// packets according to the encoded hop forwarding information
	// contained in the forwarding blob within each HTLC.
	//
	// TODO(roasbeef): remove in favor of simple ForwardPacket closure func
	Switch *Switch

	// DecodeHopIterator function is responsible for decoding HTLC Sphinx
	// onion blob, and creating hop iterator which will give us next
	// destination of HTLC.
	DecodeHopIterator func(r io.Reader, rHash []byte) (HopIterator, lnwire.FailCode)

	// DecodeOnionObfuscator function is responsible for decoding HTLC
	// Sphinx onion blob, and creating onion failure obfuscator.
	DecodeOnionObfuscator func(r io.Reader) (ErrorEncrypter, lnwire.FailCode)

	// GetLastChannelUpdate retrieves the latest routing policy for this
	// particular channel. This will be used to provide payment senders our
	// latest policy when sending encrypted error messages.
	GetLastChannelUpdate func() (*lnwire.ChannelUpdate, error)

	// Peer is a lightning network node with which we have the channel link
	// opened.
	Peer Peer

	// Registry is a sub-system which responsible for managing the invoices
	// in thread-safe manner.
	Registry InvoiceDatabase

	// PreimageCache is a global witness baacon that houses any new
	// preimges discovered by other links. We'll use this to add new
	// witnesses that we discover which will notify any sub-systems
	// subscribed to new events.
	PreimageCache contractcourt.WitnessBeacon

	// UpdateContractSignals is a function closure that we'll use to update
	// outside sub-systems with the latest signals for our inner Lightning
	// channel. These signals will notify the caller when the channel has
	// been closed, or when the set of active HTLC's is updated.
	UpdateContractSignals func(*contractcourt.ContractSignals) error

	// ChainEvents is an active subscription to the chain watcher for this
	// channel to be notified of any on-chain activity related to this
	// channel.
	ChainEvents *contractcourt.ChainEventSubscription

	// FeeEstimator is an instance of a live fee estimator which will be
	// used to dynamically regulate the current fee of the commitment
	// transaction to ensure timely confirmation.
	FeeEstimator lnwallet.FeeEstimator

	// BlockEpochs is an active block epoch event stream backed by an
	// active ChainNotifier instance. The ChannelLink will use new block
	// notifications sent over this channel to decide when a _new_ HTLC is
	// too close to expiry, and also when any active HTLC's have expired
	// (or are close to expiry).
	BlockEpochs *chainntnfs.BlockEpochEvent

	// DebugHTLC should be turned on if you want all HTLCs sent to a node
	// with the debug htlc R-Hash are immediately settled in the next
	// available state transition.
	DebugHTLC bool

	// HodlHTLC should be active if you want this node to refrain from
	// settling all incoming HTLCs with the sender if it finds itself to be
	// the exit node.
	//
	// NOTE: HodlHTLC should be active in conjunction with DebugHTLC.
	HodlHTLC bool

	// SyncStates is used to indicate that we need send the channel
	// reestablishment message to the remote peer. It should be done if our
	// clients have been restarted, or remote peer have been reconnected.
	SyncStates bool

	// BatchTicker is the ticker that determines the interval that we'll
	// use to check the batch to see if there're any updates we should
	// flush out. By batching updates into a single commit, we attempt
	// to increase throughput by maximizing the number of updates
	// coalesced into a single commit.
	BatchTicker Ticker

	// BatchSize is the max size of a batch of updates done to the link
	// before we do a state update.
	BatchSize uint32
}

// channelLink is the service which drives a channel's commitment update
// state-machine. In the event that an htlc needs to be propagated to another
// link, the forward handler from config is used which sends htlc to the
// switch. Additionally, the link encapsulate logic of commitment protocol
// message ordering and updates.
type channelLink struct {
	// The following fields are only meant to be used *atomically*
	started  int32
	shutdown int32

	// batchCounter is the number of updates which we received from remote
	// side, but not include in commitment transaction yet and plus the
	// current number of settles that have been sent, but not yet committed
	// to the commitment.
	//
	// TODO(andrew.shvv) remove after we add additional
	// BatchNumber() method in state machine.
	batchCounter uint32

	// bestHeight is the best known height of the main chain. The link will
	// use this information to govern decisions based on HTLC timeouts.
	bestHeight uint32

	// channel is a lightning network channel to which we apply htlc
	// updates.
	channel *lnwallet.LightningChannel

	// shortChanID is the most up to date short channel ID for the link.
	shortChanID lnwire.ShortChannelID

	// cfg is a structure which carries all dependable fields/handlers
	// which may affect behaviour of the service.
	cfg ChannelLinkConfig

	// overflowQueue is used to store the htlc add updates which haven't
	// been processed because of the commitment transaction overflow.
	overflowQueue *packetQueue

	// mailBox is the main interface between the outside world and the
	// link. All incoming messages will be sent over this mailBox. Messages
	// include new updates from our connected peer, and new packets to be
	// forwarded sent by the switch.
	mailBox *memoryMailBox

	// upstream is a channel that new messages sent from the remote peer to
	// the local peer will be sent across.
	upstream chan lnwire.Message

	// downstream is a channel in which new multi-hop HTLC's to be
	// forwarded will be sent across. Messages from this channel are sent
	// by the HTLC switch.
	downstream chan *htlcPacket

	// linkControl is a channel which is used to query the state of the
	// link, or update various policies used which govern if an HTLC is to
	// be forwarded and/or accepted.
	linkControl chan interface{}

	// htlcUpdates is a channel that we'll use to update outside
	// sub-systems with the latest set of active HTLC's on our channel.
	htlcUpdates chan []channeldb.HTLC

	// logCommitTimer is a timer which is sent upon if we go an interval
	// without receiving/sending a commitment update. It's role is to
	// ensure both chains converge to identical state in a timely manner.
	//
	// TODO(roasbeef): timer should be >> then RTT
	logCommitTimer *time.Timer
	logCommitTick  <-chan time.Time

	sync.RWMutex

	wg   sync.WaitGroup
	quit chan struct{}
}

// NewChannelLink creates a new instance of a ChannelLink given a configuration
// and active channel that will be used to verify/apply updates to.
func NewChannelLink(cfg ChannelLinkConfig, channel *lnwallet.LightningChannel,
	currentHeight uint32) ChannelLink {

	link := &channelLink{
		cfg:         cfg,
		channel:     channel,
		shortChanID: channel.ShortChanID(),
		mailBox:     newMemoryMailBox(),
		linkControl: make(chan interface{}),
		// TODO(roasbeef): just do reserve here?
		logCommitTimer: time.NewTimer(300 * time.Millisecond),
		overflowQueue:  newPacketQueue(lnwallet.MaxHTLCNumber / 2),
		bestHeight:     currentHeight,
		htlcUpdates:    make(chan []channeldb.HTLC),
		quit:           make(chan struct{}),
	}

	link.upstream = link.mailBox.MessageOutBox()
	link.downstream = link.mailBox.PacketOutBox()

	return link
}

// A compile time check to ensure channelLink implements the ChannelLink
// interface.
var _ ChannelLink = (*channelLink)(nil)

// Start starts all helper goroutines required for the operation of the channel
// link.
//
// NOTE: Part of the ChannelLink interface.
func (l *channelLink) Start() error {
	if !atomic.CompareAndSwapInt32(&l.started, 0, 1) {
		err := errors.Errorf("channel link(%v): already started", l)
		log.Warn(err)
		return err
	}

	log.Infof("ChannelLink(%v) is starting", l)

	// Before we start the link, we'll update the ChainArbitrator with the
	// set of new channel signals for this channel.
	//
	// TODO(roasbeef): split goroutines within channel arb to avoid
	go func() {
		err := l.cfg.UpdateContractSignals(&contractcourt.ContractSignals{
			HtlcUpdates: l.htlcUpdates,
			ShortChanID: l.channel.ShortChanID(),
		})
		if err != nil {
			log.Errorf("Unable to update signals for "+
				"ChannelLink(%v)", l)
		}
	}()

	l.mailBox.Start()
	l.overflowQueue.Start()

	l.wg.Add(1)
	go l.htlcManager()

	return nil
}

// Stop gracefully stops all active helper goroutines, then waits until they've
// exited.
//
// NOTE: Part of the ChannelLink interface.
func (l *channelLink) Stop() {
	if !atomic.CompareAndSwapInt32(&l.shutdown, 0, 1) {
		log.Warnf("channel link(%v): already stopped", l)
		return
	}

	log.Infof("ChannelLink(%v) is stopping", l)

	if l.cfg.ChainEvents.Cancel != nil {
		l.cfg.ChainEvents.Cancel()
	}

	l.channel.Stop()

	l.mailBox.Stop()
	l.overflowQueue.Stop()

	close(l.quit)
	l.wg.Wait()
}

// EligibleToForward returns a bool indicating if the channel is able to
// actively accept requests to forward HTLC's. We're able to forward HTLC's if
// we know the remote party's next revocation point. Otherwise, we can't
// initiate new channel state.
func (l *channelLink) EligibleToForward() bool {
	return l.channel.RemoteNextRevocation() != nil
}

// sampleNetworkFee samples the current fee rate on the network to get into the
// chain in a timely manner. The returned value is expressed in fee-per-kw, as
// this is the native rate used when computing the fee for commitment
// transactions, and the second-level HTLC transactions.
func (l *channelLink) sampleNetworkFee() (btcutil.Amount, error) {
	// We'll first query for the sat/weight recommended to be confirmed
	// within 3blocks.
	feePerWeight, err := l.cfg.FeeEstimator.EstimateFeePerWeight(3)
	if err != nil {
		return 0, err
	}

	// Once we have this fee rate, we'll convert to sat-per-kw.
	feePerKw := feePerWeight * 1000

	log.Debugf("ChannelLink(%v): sampled fee rate for 3 block conf: %v "+
		"sat/kw", l, int64(feePerKw))

	return feePerKw, nil
}

// shouldAdjustCommitFee returns true if we should update our commitment fee to
// match that of the network fee. We'll only update our commitment fee if the
// network fee is +/- 10% to our network fee.
func shouldAdjustCommitFee(netFee, chanFee btcutil.Amount) bool {
	switch {
	// If the network fee is greater than the commitment fee, then we'll
	// switch to it if it's at least 10% greater than the commit fee.
	case netFee > chanFee && netFee >= (chanFee+(chanFee*10)/100):
		return true

	// If the network fee is less than our commitment fee, then we'll
	// switch to it if it's at least 10% less than the commitment fee.
	case netFee < chanFee && netFee <= (chanFee-(chanFee*10)/100):
		return true

	// Otherwise, we won't modify our fee.
	default:
		return false
	}
}

// syncChanState attempts to synchronize channel states with the remote party.
// This method is to be called upon reconnection after the initial funding
// flow. We'll compare out commitment chains with the remote party, and re-send
// either a danging commit signature, a revocation, or both.
func (l *channelLink) syncChanStates() error {
	log.Infof("Attempting to re-resynchronize ChannelPoint(%v)",
		l.channel.ChannelPoint())

	// First, we'll generate our ChanSync message to send to the other
	// side. Based on this message, the remote party will decide if they
	// need to retransmit any data or not.
	localChanSyncMsg, err := l.channel.ChanSyncMsg()
	if err != nil {
		return fmt.Errorf("unable to generate chan sync message for "+
			"ChannelPoint(%v)", l.channel.ChannelPoint())
	}
	if err := l.cfg.Peer.SendMessage(localChanSyncMsg); err != nil {
		return fmt.Errorf("Unable to send chan sync message for "+
			"ChannelPoint(%v)", l.channel.ChannelPoint())
	}

	var msgsToReSend []lnwire.Message

	// Next, we'll wait to receive the ChanSync message with a timeout
	// period. The first message sent MUST be the ChanSync message,
	// otherwise, we'll terminate the connection.
	chanSyncDeadline := time.After(time.Second * 30)
	select {
	case msg := <-l.upstream:
		remoteChanSyncMsg, ok := msg.(*lnwire.ChannelReestablish)
		if !ok {
			return fmt.Errorf("first message sent to sync "+
				"should be ChannelReestablish, instead "+
				"received: %T", msg)
		}

		// If the remote party indicates that they think we haven't
		// done any state updates yet, then we'll retransmit the
		// funding locked message first. We do this, as at this point
		// we can't be sure if they've really received the
		// FundingLocked message.
		if remoteChanSyncMsg.NextLocalCommitHeight == 1 &&
			localChanSyncMsg.NextLocalCommitHeight == 1 &&
			!l.channel.IsPending() {

			log.Infof("ChannelPoint(%v): resending "+
				"FundingLocked message to peer",
				l.channel.ChannelPoint())

			nextRevocation, err := l.channel.NextRevocationKey()
			if err != nil {
				return fmt.Errorf("unable to create next "+
					"revocation: %v", err)
			}

			fundingLockedMsg := lnwire.NewFundingLocked(
				l.ChanID(), nextRevocation,
			)
			err = l.cfg.Peer.SendMessage(fundingLockedMsg)
			if err != nil {
				return fmt.Errorf("unable to re-send "+
					"FundingLocked: %v", err)
			}
		}

		// In any case, we'll then process their ChanSync message.
		log.Infof("Received re-establishment message from remote side "+
			"for channel(%v)", l.channel.ChannelPoint())

		// We've just received a ChnSync message from the remote party,
		// so we'll process the message  in order to determine if we
		// need to re-transmit any messages to the remote party.
		msgsToReSend, err = l.channel.ProcessChanSyncMsg(remoteChanSyncMsg)
		if err != nil {
			// TODO(roasbeef): check concrete type of error, act
			// accordingly
			return fmt.Errorf("unable to handle upstream reestablish "+
				"message: %v", err)
		}

		if len(msgsToReSend) > 0 {
			log.Infof("Sending %v updates to synchronize the "+
				"state for ChannelPoint(%v)", len(msgsToReSend),
				l.channel.ChannelPoint())
		}

		// If we have any messages to retransmit, we'll do so
		// immediately so we return to a synchronized state as soon as
		// possible.
		for _, msg := range msgsToReSend {
			l.cfg.Peer.SendMessage(msg)
		}

	case <-l.quit:
		return fmt.Errorf("shutting down")

	case <-chanSyncDeadline:
		return fmt.Errorf("didn't receive ChannelReestablish before " +
			"deadline")
	}

	// In order to prep for the fragment below, we'll note if we
	// retransmitted any HTLC's settles earlier. We'll track them by the
	// HTLC index of the remote party in order to avoid erroneously sending
	// a duplicate settle.
	htlcsSettled := make(map[uint64]struct{})
	for _, msg := range msgsToReSend {
		settleMsg, ok := msg.(*lnwire.UpdateFufillHTLC)
		if !ok {
			// If this isn't a settle message, then we'll skip it.
			continue
		}

		// Otherwise, we'll note the ID of the HTLC we're settling so we
		// don't duplicate it below.
		htlcsSettled[settleMsg.ID] = struct{}{}
	}

	// Now that we've synchronized our state, we'll check to see if
	// there're any HTLC's that we received, but weren't able to settle
	// directly the last time we were active. If we find any, then we'll
	// send the settle message, then being to initiate a state transition.
	//
	// TODO(roasbeef): can later just inspect forwarding package
	activeHTLCs := l.channel.ActiveHtlcs()
	for _, htlc := range activeHTLCs {
		if !htlc.Incoming {
			continue
		}

		// Before we attempt to settle this HTLC, we'll check to see if
		// we just re-sent it as part of the channel sync. If so, then
		// we'll skip it.
		if _, ok := htlcsSettled[htlc.HtlcIndex]; ok {
			continue
		}

		// Now we'll check to if we we actually know the preimage if we
		// don't then we'll skip it.
		preimage, ok := l.cfg.PreimageCache.LookupPreimage(htlc.RHash[:])
		if !ok {
			continue
		}

		// At this point, we've found an unsettled HTLC that we know
		// the preimage to, so we'll send a settle message to the
		// remote party.
		var p [32]byte
		copy(p[:], preimage)
		err := l.channel.SettleHTLC(p, htlc.HtlcIndex)
		if err != nil {
			l.fail("unable to settle htlc: %v", err)
			return err
		}

		// We'll now mark the HTLC as settled in the invoice database,
		// then send the settle message to the remote party.
		err = l.cfg.Registry.SettleInvoice(htlc.RHash)
		if err != nil {
			l.fail("unable to settle invoice: %v", err)
			return err
		}
		l.batchCounter++
		l.cfg.Peer.SendMessage(&lnwire.UpdateFufillHTLC{
			ChanID:          l.ChanID(),
			ID:              htlc.HtlcIndex,
			PaymentPreimage: p,
		})

	}

	return nil
}

// htlcManager is the primary goroutine which drives a channel's commitment
// update state-machine in response to messages received via several channels.
// This goroutine reads messages from the upstream (remote) peer, and also from
// downstream channel managed by the channel link. In the event that an htlc
// needs to be forwarded, then send-only forward handler is used which sends
// htlc packets to the switch. Additionally, the this goroutine handles acting
// upon all timeouts for any active HTLCs, manages the channel's revocation
// window, and also the htlc trickle queue+timer for this active channels.
//
// NOTE: This MUST be run as a goroutine.
func (l *channelLink) htlcManager() {
	defer func() {
		l.wg.Done()
		l.cfg.BlockEpochs.Cancel()
		log.Infof("ChannelLink(%v) has exited", l)
	}()

	log.Infof("HTLC manager for ChannelPoint(%v) started, "+
		"bandwidth=%v", l.channel.ChannelPoint(), l.Bandwidth())

	// TODO(roasbeef): need to call wipe chan whenever D/C?

	// If this isn't the first time that this channel link has been
	// created, then we'll need to check to see if we need to
	// re-synchronize state with the remote peer. settledHtlcs is a map of
	// HTLC's that we re-settled as part of the channel state sync.
	if l.cfg.SyncStates {
		// TODO(roasbeef): need to ensure haven't already settled?
		if err := l.syncChanStates(); err != nil {
			l.fail(err.Error())
			return
		}
	}

	batchTick := l.cfg.BatchTicker.Start()
	defer l.cfg.BatchTicker.Stop()

	// TODO(roasbeef): fail chan in case of protocol violation
out:
	for {
		select {

		// A new block has arrived, we'll check the network fee to see
		// if we should adjust our commitment fee, and also update our
		// track of the best current height.
		case blockEpoch, ok := <-l.cfg.BlockEpochs.Epochs:
			if !ok {
				break out
			}

			l.bestHeight = uint32(blockEpoch.Height)

			// If we're not the initiator of the channel, don't we
			// don't control the fees, so we can ignore this.
			if !l.channel.IsInitiator() {
				continue
			}

			// If we are the initiator, then we'll sample the
			// current fee rate to get into the chain within 3
			// blocks.
			feePerKw, err := l.sampleNetworkFee()
			if err != nil {
				log.Errorf("unable to sample network fee: %v", err)
				continue
			}

			// We'll check to see if we should update the fee rate
			// based on our current set fee rate.
			commitFee := l.channel.CommitFeeRate()
			if !shouldAdjustCommitFee(feePerKw, commitFee) {
				continue
			}

			// If we do, then we'll send a new UpdateFee message to
			// the remote party, to be locked in with a new update.
			if err := l.updateChannelFee(feePerKw); err != nil {
				log.Errorf("unable to update fee rate: %v", err)
				continue
			}

		// The underlying channel has notified us of a unilateral close
		// carried out by the remote peer. In the case of such an
		// event, we'll wipe the channel state from the peer, and mark
		// the contract as fully settled. Afterwards we can exit.
		case <-l.cfg.ChainEvents.UnilateralClosure:
			log.Warnf("Remote peer has closed ChannelPoint(%v) on-chain",
				l.channel.ChannelPoint())

			// TODO(roasbeef): remove all together
			go func() {
				chanPoint := l.channel.ChannelPoint()
				if err := l.cfg.Peer.WipeChannel(chanPoint); err != nil {
					log.Errorf("unable to wipe channel %v", err)
				}
			}()

			break out

		case <-l.logCommitTick:
			// If we haven't sent or received a new commitment
			// update in some time, check to see if we have any
			// pending updates we need to commit due to our
			// commitment chains being desynchronized.
			if l.channel.FullySynced() {
				continue
			}

			if err := l.updateCommitTx(); err != nil {
				l.fail("unable to update commitment: %v", err)
				break out
			}

		case <-batchTick:
			// If the current batch is empty, then we have no work
			// here.
			if l.batchCounter == 0 {
				continue
			}

			// Otherwise, attempt to extend the remote commitment
			// chain including all the currently pending entries.
			// If the send was unsuccessful, then abandon the
			// update, waiting for the revocation window to open
			// up.
			if err := l.updateCommitTx(); err != nil {
				l.fail("unable to update commitment: %v", err)
				break out
			}

		// A packet that previously overflowed the commitment
		// transaction is now eligible for processing once again. So
		// we'll attempt to re-process the packet in order to allow it
		// to continue propagating within the network.
		case packet := <-l.overflowQueue.outgoingPkts:
			msg := packet.htlc.(*lnwire.UpdateAddHTLC)
			log.Tracef("Reprocessing downstream add update "+
				"with payment hash(%x)", msg.PaymentHash[:])

			l.handleDownStreamPkt(packet, true)

		// A message from the switch was just received. This indicates
		// that the link is an intermediate hop in a multi-hop HTLC
		// circuit.
		case pkt := <-l.downstream:
			// If we have non empty processing queue then we'll add
			// this to the overflow rather than processing it
			// directly. Once an active HTLC is either settled or
			// failed, then we'll free up a new slot.
			htlc, ok := pkt.htlc.(*lnwire.UpdateAddHTLC)
			if ok && l.overflowQueue.Length() != 0 {
				log.Infof("Downstream htlc add update with "+
					"payment hash(%x) have been added to "+
					"reprocessing queue, batch_size=%v",
					htlc.PaymentHash[:],
					l.batchCounter)

				l.overflowQueue.AddPkt(pkt)
				continue
			}
			l.handleDownStreamPkt(pkt, false)

		// A message from the connected peer was just received. This
		// indicates that we have a new incoming HTLC, either directly
		// for us, or part of a multi-hop HTLC circuit.
		case msg := <-l.upstream:
			l.handleUpstreamMsg(msg)

		// TODO(roasbeef): make distinct goroutine to handle?
		case cmd := <-l.linkControl:

			switch req := cmd.(type) {
			case *policyUpdate:
				// In order to avoid overriding a valid policy
				// with a "null" field in the new policy, we'll
				// only update to the set sub policy if the new
				// value isn't uninitialized.
				if req.policy.BaseFee != 0 {
					l.cfg.FwrdingPolicy.BaseFee = req.policy.BaseFee
				}
				if req.policy.FeeRate != 0 {
					l.cfg.FwrdingPolicy.FeeRate = req.policy.FeeRate
				}
				if req.policy.TimeLockDelta != 0 {
					l.cfg.FwrdingPolicy.TimeLockDelta = req.policy.TimeLockDelta
				}

				if req.done != nil {
					close(req.done)
				}
			}

		case <-l.quit:
			break out
		}
	}
}

// handleDownStreamPkt processes an HTLC packet sent from the downstream HTLC
// Switch. Possible messages sent by the switch include requests to forward new
// HTLCs, timeout previously cleared HTLCs, and finally to settle currently
// cleared HTLCs with the upstream peer.
//
// TODO(roasbeef): add sync ntfn to ensure switch always has consistent view?
func (l *channelLink) handleDownStreamPkt(pkt *htlcPacket, isReProcess bool) {
	var isSettle bool
	switch htlc := pkt.htlc.(type) {
	case *lnwire.UpdateAddHTLC:
		// A new payment has been initiated via the downstream channel,
		// so we add the new HTLC to our local log, then update the
		// commitment chains.
		htlc.ChanID = l.ChanID()
		index, err := l.channel.AddHTLC(htlc)
		if err != nil {
			switch err {

			// The channels spare bandwidth is fully allocated, so
			// we'll put this HTLC into the overflow queue.
			case lnwallet.ErrMaxHTLCNumber:
				log.Infof("Downstream htlc add update with "+
					"payment hash(%x) have been added to "+
					"reprocessing queue, batch: %v",
					htlc.PaymentHash[:],
					l.batchCounter)

				l.overflowQueue.AddPkt(pkt)
				return

			// The HTLC was unable to be added to the state
			// machine, as a result, we'll signal the switch to
			// cancel the pending payment.
			default:
				log.Warnf("Unable to handle downstream add HTLC: %v", err)

				var (
					localFailure = false
					reason       lnwire.OpaqueReason
				)

				failure := lnwire.NewTemporaryChannelFailure(nil)

				// Encrypt the error back to the source unless the payment was
				// generated locally.
				if pkt.obfuscator == nil {
					var b bytes.Buffer
					err := lnwire.EncodeFailure(&b, failure, 0)
					if err != nil {
						log.Errorf("unable to encode failure: %v", err)
						return
					}
					reason = lnwire.OpaqueReason(b.Bytes())
					localFailure = true
				} else {
					var err error
					reason, err = pkt.obfuscator.EncryptFirstHop(failure)
					if err != nil {
						log.Errorf("unable to obfuscate error: %v", err)
						return
					}
				}

				failPkt := &htlcPacket{
					incomingChanID: pkt.incomingChanID,
					incomingHTLCID: pkt.incomingHTLCID,
					amount:         htlc.Amount,
					isRouted:       true,
					localFailure:   localFailure,
					htlc: &lnwire.UpdateFailHTLC{
						Reason: reason,
					},
				}

				// TODO(roasbeef): need to identify if sent
				// from switch so don't need to obfuscate
				go l.cfg.Switch.forward(failPkt)
				return
			}
		}

		log.Tracef("Received downstream htlc: payment_hash=%x, "+
			"local_log_index=%v, batch_size=%v",
			htlc.PaymentHash[:], index, l.batchCounter+1)

		// Create circuit (remember the path) in order to forward settle/fail
		// packet back.
		l.cfg.Switch.addCircuit(&PaymentCircuit{
			PaymentHash:    htlc.PaymentHash,
			IncomingChanID: pkt.incomingChanID,
			IncomingHTLCID: pkt.incomingHTLCID,
			OutgoingChanID: l.ShortChanID(),
			OutgoingHTLCID: index,
			ErrorEncrypter: pkt.obfuscator,
		})

		htlc.ID = index
		l.cfg.Peer.SendMessage(htlc)

	case *lnwire.UpdateFufillHTLC:
		// An HTLC we forward to the switch has just settled somewhere
		// upstream. Therefore we settle the HTLC within the our local
		// state machine.
		err := l.channel.SettleHTLC(htlc.PaymentPreimage, pkt.incomingHTLCID)
		if err != nil {
			// TODO(roasbeef): broadcast on-chain
			l.fail("unable to settle incoming HTLC: %v", err)
			return
		}

		// With the HTLC settled, we'll need to populate the wire
		// message to target the specific channel and HTLC to be
		// cancelled.
		htlc.ChanID = l.ChanID()
		htlc.ID = pkt.incomingHTLCID

		// Then we send the HTLC settle message to the connected peer
		// so we can continue the propagation of the settle message.
		l.cfg.Peer.SendMessage(htlc)
		isSettle = true

	case *lnwire.UpdateFailHTLC:
		// An HTLC cancellation has been triggered somewhere upstream,
		// we'll remove then HTLC from our local state machine.
		err := l.channel.FailHTLC(pkt.incomingHTLCID, htlc.Reason)
		if err != nil {
			log.Errorf("unable to cancel HTLC: %v", err)
			return
		}

		// With the HTLC removed, we'll need to populate the wire
		// message to target the specific channel and HTLC to be
		// cancelled. The "Reason" field will have already been set
		// within the switch.
		htlc.ChanID = l.ChanID()
		htlc.ID = pkt.incomingHTLCID

		// Finally, we send the HTLC message to the peer which
		// initially created the HTLC.
		l.cfg.Peer.SendMessage(htlc)
		isSettle = true
	}

	l.batchCounter++

	// If this newly added update exceeds the min batch size for adds, or
	// this is a settle request, then initiate an update.
	if l.batchCounter >= l.cfg.BatchSize || isSettle {
		if err := l.updateCommitTx(); err != nil {
			l.fail("unable to update commitment: %v", err)
			return
		}
	}
}

// handleUpstreamMsg processes wire messages related to commitment state
// updates from the upstream peer. The upstream peer is the peer whom we have a
// direct channel with, updating our respective commitment chains.
func (l *channelLink) handleUpstreamMsg(msg lnwire.Message) {
	switch msg := msg.(type) {

	case *lnwire.UpdateAddHTLC:
		// We just received an add request from an upstream peer, so we
		// add it to our state machine, then add the HTLC to our
		// "settle" list in the event that we know the preimage.
		index, err := l.channel.ReceiveHTLC(msg)
		if err != nil {
			l.fail("unable to handle upstream add HTLC: %v", err)
			return
		}

		log.Tracef("Receive upstream htlc with payment hash(%x), "+
			"assigning index: %v", msg.PaymentHash[:], index)

	case *lnwire.UpdateFufillHTLC:
		pre := msg.PaymentPreimage
		idx := msg.ID
		if err := l.channel.ReceiveHTLCSettle(pre, idx); err != nil {
			// TODO(roasbeef): broadcast on-chain
			l.fail("unable to handle upstream settle HTLC: %v", err)
			return
		}

		// TODO(roasbeef): pipeline to switch

		// As we've learned of a new preimage for the first time, we'll
		// add it to to our preimage cache. By doing this, we ensure
		// any contested contracts watched by any on-chain arbitrators
		// can now sweep this HTLC on-chain.
		go func() {
			err := l.cfg.PreimageCache.AddPreimage(pre[:])
			if err != nil {
				log.Errorf("unable to add preimage=%x to "+
					"cache", pre[:])
			}
		}()

	case *lnwire.UpdateFailMalformedHTLC:
		// Convert the failure type encoded within the HTLC fail
		// message to the proper generic lnwire error code.
		var failure lnwire.FailureMessage
		switch msg.FailureCode {
		case lnwire.CodeInvalidOnionVersion:
			failure = &lnwire.FailInvalidOnionVersion{
				OnionSHA256: msg.ShaOnionBlob,
			}
		case lnwire.CodeInvalidOnionHmac:
			failure = &lnwire.FailInvalidOnionHmac{
				OnionSHA256: msg.ShaOnionBlob,
			}

		case lnwire.CodeInvalidOnionKey:
			failure = &lnwire.FailInvalidOnionKey{
				OnionSHA256: msg.ShaOnionBlob,
			}
		default:
			log.Errorf("Unknown failure code: %v", msg.FailureCode)
			failure = &lnwire.FailTemporaryChannelFailure{}
		}

		// With the error parsed, we'll convert the into it's opaque
		// form.
		var b bytes.Buffer
		if err := lnwire.EncodeFailure(&b, failure, 0); err != nil {
			log.Errorf("unable to encode malformed error: %v", err)
			return
		}

		// If remote side have been unable to parse the onion blob we
		// have sent to it, than we should transform the malformed HTLC
		// message to the usual HTLC fail message.
		err := l.channel.ReceiveFailHTLC(msg.ID, b.Bytes())
		if err != nil {
			l.fail("unable to handle upstream fail HTLC: %v", err)
			return
		}

	case *lnwire.UpdateFailHTLC:
		idx := msg.ID
		err := l.channel.ReceiveFailHTLC(idx, msg.Reason[:])
		if err != nil {
			l.fail("unable to handle upstream fail HTLC: %v", err)
			return
		}

	case *lnwire.CommitSig:
		// We just received a new updates to our local commitment
		// chain, validate this new commitment, closing the link if
		// invalid.
		err := l.channel.ReceiveNewCommitment(msg.CommitSig, msg.HtlcSigs)
		if err != nil {
			// If we were unable to reconstruct their proposed
			// commitment, then we'll examine the type of error. If
			// it's an InvalidCommitSigError, then we'll send a
			// direct error.
			//
			// TODO(roasbeef): force close chan
			if _, ok := err.(*lnwallet.InvalidCommitSigError); ok {
				l.cfg.Peer.SendMessage(&lnwire.Error{
					ChanID: l.ChanID(),
					Data:   []byte(err.Error()),
				})
			}

			l.fail("ChannelPoint(%v): unable to accept new "+
				"commitment: %v", l.channel.ChannelPoint(), err)
			return
		}

		// As we've just just accepted a new state, we'll now
		// immediately send the remote peer a revocation for our prior
		// state.
		nextRevocation, currentHtlcs, err := l.channel.RevokeCurrentCommitment()
		if err != nil {
			log.Errorf("unable to revoke commitment: %v", err)
			return
		}
		l.cfg.Peer.SendMessage(nextRevocation)

		// Since we just revoked our commitment, we may have a new set
		// of HTLC's on our commitment, so we'll send them over our
		// HTLC update channel so any callers can be notified.
		select {
		case l.htlcUpdates <- currentHtlcs:
		case <-l.quit:
			return
		}

		// As we've just received a commitment signature, we'll
		// re-start the log commit timer to wake up the main processing
		// loop to check if we need to send a commitment signature as
		// we owe one.
		//
		// TODO(roasbeef): instead after revocation?
		if !l.logCommitTimer.Stop() {
			select {
			case <-l.logCommitTimer.C:
			default:
			}
		}
		l.logCommitTimer.Reset(300 * time.Millisecond)
		l.logCommitTick = l.logCommitTimer.C

		// If both commitment chains are fully synced from our PoV,
		// then we don't need to reply with a signature as both sides
		// already have a commitment with the latest accepted l.
		if l.channel.FullySynced() {
			return
		}

		// Otherwise, the remote party initiated the state transition,
		// so we'll reply with a signature to provide them with their
		// version of the latest commitment.
		if err := l.updateCommitTx(); err != nil {
			l.fail("unable to update commitment: %v", err)
			return
		}

	case *lnwire.RevokeAndAck:
		// We've received a revocation from the remote chain, if valid,
		// this moves the remote chain forward, and expands our
		// revocation window.
		htlcs, err := l.channel.ReceiveRevocation(msg)
		if err != nil {
			l.fail("unable to accept revocation: %v", err)
			return
		}

		// After we treat HTLCs as included in both remote/local
		// commitment transactions they might be safely propagated over
		// htlc switch or settled if our node was last node in htlc
		// path.
		htlcsToForward := l.processLockedInHtlcs(htlcs)
		go func() {
			log.Debugf("ChannelPoint(%v) forwarding %v HTLC's",
				l.channel.ChannelPoint(), len(htlcsToForward))
			for _, packet := range htlcsToForward {
				if err := l.cfg.Switch.forward(packet); err != nil {
					// TODO(roasbeef): cancel back htlc
					// under certain conditions?
					log.Errorf("channel link(%v): "+
						"unhandled error while forwarding "+
						"htlc packet over htlc  "+
						"switch: %v", l, err)
				}
			}
		}()

	case *lnwire.UpdateFee:
		// We received fee update from peer. If we are the initiator we
		// will fail the channel, if not we will apply the update.
		fee := btcutil.Amount(msg.FeePerKw)
		if err := l.channel.ReceiveUpdateFee(fee); err != nil {
			l.fail("error receiving fee update: %v", err)
			return
		}
	}
}

// updateCommitTx signs, then sends an update to the remote peer adding a new
// commitment to their commitment chain which includes all the latest updates
// we've received+processed up to this point.
func (l *channelLink) updateCommitTx() error {
	theirCommitSig, htlcSigs, err := l.channel.SignNextCommitment()
	if err == lnwallet.ErrNoWindow {
		log.Tracef("revocation window exhausted, unable to send %v",
			l.batchCounter)
		return nil
	} else if err != nil {
		return err
	}

	commitSig := &lnwire.CommitSig{
		ChanID:    l.ChanID(),
		CommitSig: theirCommitSig,
		HtlcSigs:  htlcSigs,
	}
	l.cfg.Peer.SendMessage(commitSig)

	// We've just initiated a state transition, attempt to stop the
	// logCommitTimer. If the timer already ticked, then we'll consume the
	// value, dropping
	if l.logCommitTimer != nil && !l.logCommitTimer.Stop() {
		select {
		case <-l.logCommitTimer.C:
		default:
		}
	}
	l.logCommitTick = nil

	// Finally, clear our the current batch, so we can accurately make
	// further batch flushing decisions.
	l.batchCounter = 0

	return nil
}

// Peer returns the representation of remote peer with which we have the
// channel link opened.
//
// NOTE: Part of the ChannelLink interface.
func (l *channelLink) Peer() Peer {
	return l.cfg.Peer
}

// ShortChanID returns the short channel ID for the channel link. The short
// channel ID encodes the exact location in the main chain that the original
// funding output can be found.
//
// NOTE: Part of the ChannelLink interface.
func (l *channelLink) ShortChanID() lnwire.ShortChannelID {
	l.RLock()
	defer l.RUnlock()
	return l.shortChanID
}

// UpdateShortChanID updates the short channel ID for a link. This may be
// required in the event that a link is created before the short chan ID for it
// is known, or a re-org occurs, and the funding transaction changes location
// within the chain.
//
// NOTE: Part of the ChannelLink interface.
func (l *channelLink) UpdateShortChanID(sid lnwire.ShortChannelID) {
	l.Lock()
	defer l.Unlock()

	log.Infof("Updating short chan ID for ChannelPoint(%v)", l)

	l.shortChanID = sid

	go func() {
		err := l.cfg.UpdateContractSignals(&contractcourt.ContractSignals{
			HtlcUpdates: l.htlcUpdates,
			ShortChanID: l.channel.ShortChanID(),
		})
		if err != nil {
			log.Errorf("Unable to update signals for "+
				"ChannelLink(%v)", l)
		}
	}()

	return
}

// ChanID returns the channel ID for the channel link. The channel ID is a more
// compact representation of a channel's full outpoint.
//
// NOTE: Part of the ChannelLink interface.
func (l *channelLink) ChanID() lnwire.ChannelID {
	return lnwire.NewChanIDFromOutPoint(l.channel.ChannelPoint())
}

// getBandwidthCmd is a wrapper for get bandwidth handler.
type getBandwidthCmd struct {
	resp chan lnwire.MilliSatoshi
}

// Bandwidth returns the total amount that can flow through the channel link at
// this given instance. The value returned is expressed in millisatoshi and can
// be used by callers when making forwarding decisions to determine if a link
// can accept an HTLC.
//
// NOTE: Part of the ChannelLink interface.
func (l *channelLink) Bandwidth() lnwire.MilliSatoshi {
	// TODO(roasbeef): subtract reserve
	channelBandwidth := l.channel.AvailableBalance()
	overflowBandwidth := l.overflowQueue.TotalHtlcAmount()

	return channelBandwidth - overflowBandwidth
}

// policyUpdate is a message sent to a channel link when an outside sub-system
// wishes to update the current forwarding policy.
type policyUpdate struct {
	policy ForwardingPolicy

	done chan struct{}
}

// UpdateForwardingPolicy updates the forwarding policy for the target
// ChannelLink. Once updated, the link will use the new forwarding policy to
// govern if it an incoming HTLC should be forwarded or not. Note that this
// processing of the new policy will ensure that uninitialized fields in the
// passed policy won't override already initialized fields in the current
// policy.
//
// NOTE: Part of the ChannelLink interface.
func (l *channelLink) UpdateForwardingPolicy(newPolicy ForwardingPolicy) {
	cmd := &policyUpdate{
		policy: newPolicy,
		done:   make(chan struct{}),
	}

	select {
	case l.linkControl <- cmd:
	case <-l.quit:
	}

	select {
	case <-cmd.done:
	case <-l.quit:
	}
}

// Stats returns the statistics of channel link.
//
// NOTE: Part of the ChannelLink interface.
func (l *channelLink) Stats() (uint64, lnwire.MilliSatoshi, lnwire.MilliSatoshi) {
	snapshot := l.channel.StateSnapshot()

	return snapshot.ChannelCommitment.CommitHeight,
		snapshot.TotalMSatSent,
		snapshot.TotalMSatReceived
}

// String returns the string representation of channel link.
//
// NOTE: Part of the ChannelLink interface.
func (l *channelLink) String() string {
	return l.channel.ChannelPoint().String()
}

// HandleSwitchPacket handles the switch packets. This packets which might be
// forwarded to us from another channel link in case the htlc update came from
// another peer or if the update was created by user
//
// NOTE: Part of the ChannelLink interface.
func (l *channelLink) HandleSwitchPacket(packet *htlcPacket) {
	l.mailBox.AddPacket(packet)
}

// HandleChannelUpdate handles the htlc requests as settle/add/fail which sent
// to us from remote peer we have a channel with.
//
// NOTE: Part of the ChannelLink interface.
func (l *channelLink) HandleChannelUpdate(message lnwire.Message) {
	l.mailBox.AddMessage(message)
}

// updateChannelFee updates the commitment fee-per-kw on this channel by
// committing to an update_fee message.
func (l *channelLink) updateChannelFee(feePerKw btcutil.Amount) error {

	log.Infof("ChannelPoint(%v): updating commit fee to %v sat/kw", l,
		feePerKw)

	// We skip sending the UpdateFee message if the channel is not
	// currently eligable to forward messages.
	if !l.EligibleToForward() {
		log.Debugf("ChannelPoint(%v): skipping fee update for " +
			"inactive channel")
		return nil
	}

	// First, we'll update the local fee on our commitment.
	if err := l.channel.UpdateFee(feePerKw); err != nil {
		return err
	}

	// We'll then attempt to send a new UpdateFee message, and also lock it
	// in immediately by triggering a commitment update.
	msg := lnwire.NewUpdateFee(l.ChanID(), uint32(feePerKw))
	if err := l.cfg.Peer.SendMessage(msg); err != nil {
		return err
	}
	return l.updateCommitTx()
}

// processLockedInHtlcs serially processes each of the log updates which have
// been "locked-in". An HTLC is considered locked-in once it has been fully
// committed to in both the remote and local commitment state. Once a channel
// updates is locked-in, then it can be acted upon, meaning: settling HTLCs,
// cancelling them, or forwarding new HTLCs to the next hop.
func (l *channelLink) processLockedInHtlcs(
	paymentDescriptors []*lnwallet.PaymentDescriptor) []*htlcPacket {

	var (
		needUpdate       bool
		packetsToForward []*htlcPacket
	)

	for _, pd := range paymentDescriptors {
		// TODO(roasbeef): rework log entries to a shared
		// interface.
		switch pd.EntryType {

		// A settle for an HTLC we previously forwarded HTLC has been
		// received. So we'll forward the HTLC to the switch which
		// will handle propagating the settle to the prior hop.
		case lnwallet.Settle:
			settlePacket := &htlcPacket{
				outgoingChanID: l.ShortChanID(),
				outgoingHTLCID: pd.ParentIndex,
				amount:         pd.Amount,
				htlc: &lnwire.UpdateFufillHTLC{
					PaymentPreimage: pd.RPreimage,
				},
			}

			// Add the packet to the batch to be forwarded, and
			// notify the overflow queue that a spare spot has been
			// freed up within the commitment state.
			packetsToForward = append(packetsToForward, settlePacket)
			l.overflowQueue.SignalFreeSlot()

		// A failureCode message for a previously forwarded HTLC has been
		// received. As a result a new slot will be freed up in our
		// commitment state, so we'll forward this to the switch so the
		// backwards undo can continue.
		case lnwallet.Fail:
			// Fetch the reason the HTLC was cancelled so we can
			// continue to propagate it.
			failPacket := &htlcPacket{
				outgoingChanID: l.ShortChanID(),
				outgoingHTLCID: pd.ParentIndex,
				amount:         pd.Amount,
				htlc: &lnwire.UpdateFailHTLC{
					Reason: lnwire.OpaqueReason(pd.FailReason),
				},
			}

			// Add the packet to the batch to be forwarded, and
			// notify the overflow queue that a spare spot has been
			// freed up within the commitment state.
			packetsToForward = append(packetsToForward, failPacket)
			l.overflowQueue.SignalFreeSlot()

		// An incoming HTLC add has been full-locked in. As a result we
		// can now examine the forwarding details of the HTLC, and the
		// HTLC itself to decide if: we should forward it, cancel it,
		// or are able to settle it (and it adheres to our fee related
		// constraints).
		case lnwallet.Add:
			// Fetch the onion blob that was included within this
			// processed payment descriptor.
			var onionBlob [lnwire.OnionPacketSize]byte
			copy(onionBlob[:], pd.OnionBlob)

			// Retrieve onion obfuscator from onion blob in order
			// to produce initial obfuscation of the onion
			// failureCode.
			onionReader := bytes.NewReader(onionBlob[:])
			obfuscator, failureCode := l.cfg.DecodeOnionObfuscator(
				onionReader,
			)
			if failureCode != lnwire.CodeNone {
				// If we're unable to process the onion blob
				// than we should send the malformed htlc error
				// to payment sender.
				l.sendMalformedHTLCError(pd.HtlcIndex, failureCode,
					onionBlob[:])
				needUpdate = true

				log.Errorf("unable to decode onion "+
					"obfuscator: %v", failureCode)
				continue
			}

			// Before adding the new htlc to the state machine,
			// parse the onion object in order to obtain the
			// routing information with DecodeHopIterator function
			// which process the Sphinx packet.
			//
			// We include the payment hash of the htlc as it's
			// authenticated within the Sphinx packet itself as
			// associated data in order to thwart attempts a replay
			// attacks. In the case of a replay, an attacker is
			// *forced* to use the same payment hash twice, thereby
			// losing their money entirely.
			onionReader = bytes.NewReader(onionBlob[:])
			chanIterator, failureCode := l.cfg.DecodeHopIterator(
				onionReader, pd.RHash[:],
			)
			if failureCode != lnwire.CodeNone {
				// If we're unable to process the onion blob
				// than we should send the malformed htlc error
				// to payment sender.
				l.sendMalformedHTLCError(pd.HtlcIndex, failureCode,
					onionBlob[:])
				needUpdate = true

				log.Errorf("unable to decode onion hop "+
					"iterator: %v", failureCode)
				continue
			}

			heightNow := l.bestHeight

			fwdInfo := chanIterator.ForwardingInstructions()
			switch fwdInfo.NextHop {
			case exitHop:
				if l.cfg.DebugHTLC && l.cfg.HodlHTLC {
					log.Warnf("hodl HTLC mode enabled, " +
						"will not attempt to settle " +
						"HTLC with sender")
					continue
				}

				// First, we'll check the expiry of the HTLC
				// itself against, the current block height. If
				// the timeout is too soon, then we'll reject
				// the HTLC.
				if pd.Timeout-expiryGraceDelta <= heightNow {
					log.Errorf("htlc(%x) has an expiry "+
						"that's too soon: expiry=%v, "+
						"best_height=%v", pd.RHash[:],
						pd.Timeout, heightNow)

					failure := lnwire.FailFinalIncorrectCltvExpiry{}
					l.sendHTLCError(pd.HtlcIndex, &failure, obfuscator)
					needUpdate = true
					continue
				}

				// We're the designated payment destination.
				// Therefore we attempt to see if we have an
				// invoice locally which'll allow us to settle
				// this htlc.
				invoiceHash := chainhash.Hash(pd.RHash)
				invoice, err := l.cfg.Registry.LookupInvoice(invoiceHash)
				if err != nil {
					log.Errorf("unable to query invoice registry: "+
						" %v", err)
					failure := lnwire.FailUnknownPaymentHash{}
					l.sendHTLCError(pd.HtlcIndex, failure, obfuscator)
					needUpdate = true
					continue
				}

				// If this invoice has already been settled,
				// then we'll reject it as we don't allow an
				// invoice to be paid twice.
				if invoice.Terms.Settled == true {
					log.Warnf("Rejecting duplicate "+
						"payment for hash=%x", pd.RHash[:])
					failure := lnwire.FailUnknownPaymentHash{}
					l.sendHTLCError(
						pd.HtlcIndex, failure, obfuscator,
					)
					needUpdate = true
					continue
				}

				// If we're not currently in debug mode, and
				// the extended htlc doesn't meet the value
				// requested, then we'll fail the htlc.
				// Otherwise, we settle this htlc within our
				// local state update log, then send the update
				// entry to the remote party.
				//
				// NOTE: We make an exception when the value
				// requested by the invoice is zero. This means
				// the invoice allows the payee to specify the
				// amount of satoshis they wish to send.
				// So since we expect the htlc to have a
				// different amount, we should not fail.
				if !l.cfg.DebugHTLC && invoice.Terms.Value > 0 &&
					pd.Amount < invoice.Terms.Value {
					log.Errorf("rejecting htlc due to incorrect "+
						"amount: expected %v, received %v",
						invoice.Terms.Value, pd.Amount)
					failure := lnwire.FailIncorrectPaymentAmount{}
					l.sendHTLCError(pd.HtlcIndex, failure, obfuscator)
					needUpdate = true
					continue
				}

				// As we're the exit hop, we'll double check
				// the hop-payload included in the HTLC to
				// ensure that it was crafted correctly by the
				// sender and matches the HTLC we were
				// extended.
				//
				// NOTE: We make an exception when the value
				// requested by the invoice is zero. This means
				// the invoice allows the payee to specify the
				// amount of satoshis they wish to send.
				// So since we expect the htlc to have a
				// different amount, we should not fail.
				if !l.cfg.DebugHTLC && invoice.Terms.Value > 0 &&
					fwdInfo.AmountToForward != invoice.Terms.Value {

					log.Errorf("Onion payload of incoming "+
						"htlc(%x) has incorrect value: "+
						"expected %v, got %v", pd.RHash,
						invoice.Terms.Value,
						fwdInfo.AmountToForward)

					failure := lnwire.FailIncorrectPaymentAmount{}
					l.sendHTLCError(pd.HtlcIndex, failure, obfuscator)
					needUpdate = true
					continue
				}

				// We'll also ensure that our time-lock value
				// has been computed correctly.
				//
				// TODO(roasbeef): also accept global default?
				expectedHeight := heightNow + l.cfg.FwrdingPolicy.TimeLockDelta
				if !l.cfg.DebugHTLC {
					switch {
					case fwdInfo.OutgoingCTLV < expectedHeight:
						log.Errorf("Onion payload of incoming "+
							"htlc(%x) has incorrect time-lock: "+
							"expected %v, got %v",
							pd.RHash[:], expectedHeight,
							fwdInfo.OutgoingCTLV)

						failure := lnwire.NewFinalIncorrectCltvExpiry(
							fwdInfo.OutgoingCTLV,
						)
						l.sendHTLCError(pd.HtlcIndex, failure, obfuscator)
						needUpdate = true
						continue
					case pd.Timeout != fwdInfo.OutgoingCTLV:
						log.Errorf("HTLC(%x) has incorrect "+
							"time-lock: expected %v, got %v",
							pd.RHash[:], pd.Timeout,
							fwdInfo.OutgoingCTLV)

						failure := lnwire.NewFinalIncorrectCltvExpiry(
							fwdInfo.OutgoingCTLV,
						)
						l.sendHTLCError(pd.HtlcIndex, failure, obfuscator)
						needUpdate = true
						continue
					}
				}

				preimage := invoice.Terms.PaymentPreimage
				err = l.channel.SettleHTLC(preimage, pd.HtlcIndex)
				if err != nil {
					l.fail("unable to settle htlc: %v", err)
					return nil
				}

				// Notify the invoiceRegistry of the invoices
				// we just settled with this latest commitment
				// update.
				err = l.cfg.Registry.SettleInvoice(invoiceHash)
				if err != nil {
					l.fail("unable to settle invoice: %v", err)
					return nil
				}

				// HTLC was successfully settled locally send
				// notification about it remote peer.
				l.cfg.Peer.SendMessage(&lnwire.UpdateFufillHTLC{
					ChanID:          l.ChanID(),
					ID:              pd.HtlcIndex,
					PaymentPreimage: preimage,
				})
				needUpdate = true

			// There are additional channels left within this
			// route. So we'll verify that our forwarding
			// constraints have been properly met by by this
			// incoming HTLC.
			default:
				// We want to avoid forwarding an HTLC which
				// will expire in the near future, so we'll
				// reject an HTLC if its expiration time is too
				// close to the current height.
				timeDelta := l.cfg.FwrdingPolicy.TimeLockDelta
				if pd.Timeout-timeDelta <= heightNow {
					log.Errorf("htlc(%x) has an expiry "+
						"that's too soon: outgoing_expiry=%v, "+
						"best_height=%v", pd.RHash[:],
						pd.Timeout-timeDelta, heightNow)

					var failure lnwire.FailureMessage
					update, err := l.cfg.GetLastChannelUpdate()
					if err != nil {
						failure = lnwire.NewTemporaryChannelFailure(nil)
					} else {
						failure = lnwire.NewExpiryTooSoon(*update)
					}

					l.sendHTLCError(pd.HtlcIndex, failure, obfuscator)
					needUpdate = true
					continue
				}

				// As our second sanity check, we'll ensure that
				// the passed HTLC isn't too small. If so, then
				// we'll cancel the HTLC directly.
				if pd.Amount < l.cfg.FwrdingPolicy.MinHTLC {
					log.Errorf("Incoming htlc(%x) is too "+
						"small: min_htlc=%v, htlc_value=%v",
						pd.RHash[:], l.cfg.FwrdingPolicy.MinHTLC,
						pd.Amount)

					// As part of the returned error, we'll
					// send our latest routing policy so
					// the sending node obtains the most up
					// to date data.
					var failure lnwire.FailureMessage
					update, err := l.cfg.GetLastChannelUpdate()
					if err != nil {
						failure = lnwire.NewTemporaryChannelFailure(nil)
					} else {
						failure = lnwire.NewAmountBelowMinimum(
							pd.Amount, *update)
					}

					l.sendHTLCError(pd.HtlcIndex, failure, obfuscator)
					needUpdate = true
					continue
				}

				// Next, using the amount of the incoming HTLC,
				// we'll calculate the expected fee this
				// incoming HTLC must carry in order to be
				// accepted.
				expectedFee := ExpectedFee(
					l.cfg.FwrdingPolicy,
					fwdInfo.AmountToForward,
				)

				// If the amount of the incoming HTLC, minus
				// our expected fee isn't equal to the
				// forwarding instructions, then either the
				// values have been tampered with, or the send
				// used incorrect/dated information to
				// construct the forwarding information for
				// this hop. In any case, we'll cancel this
				// HTLC.
				if pd.Amount-expectedFee < fwdInfo.AmountToForward {
					log.Errorf("Incoming htlc(%x) has "+
						"insufficient fee: expected "+
						"%v, got %v", pd.RHash[:],
						int64(expectedFee),
						int64(pd.Amount-fwdInfo.AmountToForward))

					// As part of the returned error, we'll
					// send our latest routing policy so
					// the sending node obtains the most up
					// to date data.
					var failure lnwire.FailureMessage
					update, err := l.cfg.GetLastChannelUpdate()
					if err != nil {
						failure = lnwire.NewTemporaryChannelFailure(nil)
					} else {
						failure = lnwire.NewFeeInsufficient(pd.Amount,
							*update)
					}

					l.sendHTLCError(pd.HtlcIndex, failure, obfuscator)
					needUpdate = true
					continue
				}

				// Finally, we'll ensure that the time-lock on
				// the outgoing HTLC meets the following
				// constraint: the incoming time-lock minus our
				// time-lock delta should equal the outgoing
				// time lock. Otherwise, whether the sender
				// messed up, or an intermediate node tampered
				// with the HTLC.
				if pd.Timeout-timeDelta < fwdInfo.OutgoingCTLV {
					log.Errorf("Incoming htlc(%x) has "+
						"incorrect time-lock value: "+
						"expected at least %v block delta, "+
						"got %v block delta", pd.RHash[:],
						timeDelta,
						pd.Timeout-fwdInfo.OutgoingCTLV)

					// Grab the latest routing policy so
					// the sending node is up to date with
					// our current policy.
					update, err := l.cfg.GetLastChannelUpdate()
					if err != nil {
						l.fail("unable to create channel update "+
							"while handling the error: %v", err)
						return nil
					}

					failure := lnwire.NewIncorrectCltvExpiry(
						pd.Timeout, *update)
					l.sendHTLCError(pd.HtlcIndex, failure, obfuscator)
					needUpdate = true
					continue
				}

				// TODO(roasbeef): also add max timeout value

				// With all our forwarding constraints met,
				// we'll create the outgoing HTLC using the
				// parameters as specified in the forwarding
				// info.
				addMsg := &lnwire.UpdateAddHTLC{
					Expiry:      fwdInfo.OutgoingCTLV,
					Amount:      fwdInfo.AmountToForward,
					PaymentHash: pd.RHash,
				}

				// Finally, we'll encode the onion packet for
				// the _next_ hop using the hop iterator
				// decoded for the current hop.
				buf := bytes.NewBuffer(addMsg.OnionBlob[0:0])
				err := chanIterator.EncodeNextHop(buf)
				if err != nil {
					log.Errorf("unable to encode the "+
						"remaining route %v", err)

					failure := lnwire.NewTemporaryChannelFailure(nil)
					l.sendHTLCError(pd.HtlcIndex, failure, obfuscator)
					needUpdate = true
					continue
				}

				updatePacket := &htlcPacket{
					incomingChanID: l.ShortChanID(),
					incomingHTLCID: pd.HtlcIndex,
					outgoingChanID: fwdInfo.NextHop,
					amount:         addMsg.Amount,
					htlc:           addMsg,
					obfuscator:     obfuscator,
				}
				packetsToForward = append(packetsToForward, updatePacket)
			}
		}
	}

	if needUpdate {
		// With all the settle/cancel updates added to the local and
		// remote HTLC logs, initiate a state transition by updating
		// the remote commitment chain.
		if err := l.updateCommitTx(); err != nil {
			l.fail("unable to update commitment: %v", err)
			return nil
		}
	}

	return packetsToForward
}

// sendHTLCError functions cancels HTLC and send cancel message back to the
// peer from which HTLC was received.
func (l *channelLink) sendHTLCError(htlcIndex uint64,
	failure lnwire.FailureMessage, e ErrorEncrypter) {

	reason, err := e.EncryptFirstHop(failure)
	if err != nil {
		log.Errorf("unable to obfuscate error: %v", err)
		return
	}

	err = l.channel.FailHTLC(htlcIndex, reason)
	if err != nil {
		log.Errorf("unable cancel htlc: %v", err)
		return
	}

	l.cfg.Peer.SendMessage(&lnwire.UpdateFailHTLC{
		ChanID: l.ChanID(),
		ID:     htlcIndex,
		Reason: reason,
	})
}

// sendMalformedHTLCError helper function which sends the malformed HTLC update
// to the payment sender.
func (l *channelLink) sendMalformedHTLCError(htlcIndex uint64,
	code lnwire.FailCode, onionBlob []byte) {

	shaOnionBlob := sha256.Sum256(onionBlob)
	err := l.channel.MalformedFailHTLC(htlcIndex, code, shaOnionBlob)
	if err != nil {
		log.Errorf("unable cancel htlc: %v", err)
		return
	}

	l.cfg.Peer.SendMessage(&lnwire.UpdateFailMalformedHTLC{
		ChanID:       l.ChanID(),
		ID:           htlcIndex,
		ShaOnionBlob: shaOnionBlob,
		FailureCode:  code,
	})
}

// fail helper function which is used to encapsulate the action necessary for
// proper disconnect.
func (l *channelLink) fail(format string, a ...interface{}) {
	reason := errors.Errorf(format, a...)
	log.Error(reason)
	go l.cfg.Peer.Disconnect(reason)
}