Setup Protocol

NOTE: All of the protocols below specify a 2-party interaction but can be generalized to the multi-party case in the future.

Messages

After authentication and initializing a connection, channel establishment may begin. All state channels must run the Setup Protocol before any other protocol. As the name suggests, its purpose is to setup the counterfactual state such that later protocols can be executed correctly.

Specifically, the Setup Protocol exchanges a commitment allowing a particular off-chain application to withdraw funds from the multisignature wallet. We call this application instance the Free Balance application, representating the available funds for any new application to be installed into the state channel. The app definition is called ETHBucket.

Unlike other protocols, there is no extra message data for the Setup Protocol because the commitment digests are fully determined by the addresses of the participants.

The SetRootNonce Message

Field	Description
protocol	"setup"
fromAddress	The address of Alice
toAddress	The address of Bob
seq	1
signature	Alice's signed commitment digest

The SetRootNonceAck Message

Field	Description
protocol	"setup"
fromAddress	The address of Alice
toAddress	The address of Bob
seq	2
signature	Bob's signed commitment digest

The Setup Message

Field	Description
protocol	"setup"
multisig	The address of the on-chain Alice-Bob multisignature wallet
data	""
fromAddress	The address of Alice
toAddress	The address of Bob
seq	3
signature	Alice's signed commitment digest

The SetupAck Message

Field	Description
protocol	"setup"
multisig	The address of the on-chain Alice-Bob multisignature wallet
data	""
fromAddress	The address of Alice
toAddress	The address of Bob
seq	4
signature	Bob's signed commitment digest

Commitments

Commitment for SetRootNonce and SetRootNonceAck:

The commitments that these two messages rely on have the following parameters:

Parameter	Type	Description
rootNonceTimeout	uint256	Relative timeout in seconds after which the root nonce finalizes
rootNonceSalt	bytes32	Arbitrary value to facilitate uniqueness of the root nonce

The commitment can be visually represented like:

Commitment for Setup and SetupAck:

The commitments that these two messages rely on have the following explicit parameters:

Parameter	Type	Description
uninstallKey	bytes32	Arbitrary value that the installed free balance app's conditional transaction depends on inside the Nonce Registry

Additionally, the following parameters are implicitly computed:

Parameter	Type	Description
terms	Terms	Set to the default value
freeBalanceCfAddress	bytes32	Set to the computed value for a counterfactual address of a PaymentApp with the initial signing keys of both users and default terms

The commitment can be visually represented like:

NOTE: The usage of MultiSend in this commitment is unnecessary and should be removed.