From 019b8fa8aacd07c8b6944d787b3ced0a1784a268 Mon Sep 17 00:00:00 2001
From: Carla Kirk-Cohen <kirkcohenc@gmail.com>
Date: Wed, 14 Dec 2022 15:00:37 -0500
Subject: [PATCH] hop: add function for calculating forwarding amount

Co-authored-by: Calvin Zachman <calvin.zachman@protonmail.com>
---
 htlcswitch/hop/iterator.go      | 45 ++++++++++++++++++++++++++++
 htlcswitch/hop/iterator_test.go | 53 +++++++++++++++++++++++++++++++++
 2 files changed, 98 insertions(+)

diff --git a/htlcswitch/hop/iterator.go b/htlcswitch/hop/iterator.go
index f2f728038..095fd190d 100644
--- a/htlcswitch/hop/iterator.go
+++ b/htlcswitch/hop/iterator.go
@@ -114,6 +114,51 @@ func (r *sphinxHopIterator) ExtractErrorEncrypter(
 	return extracter(r.ogPacket.EphemeralKey)
 }
 
+// calculateForwardingAmount calculates the amount to forward for a blinded
+// hop based on the incoming amount and forwarding parameters.
+//
+// When forwarding a payment, the fee we take is calculated, not on the
+// incoming amount, but rather on the amount we forward. We charge fees based
+// on our own liquidity we are forwarding downstream.
+//
+// With route blinding, we are NOT given the amount to forward.  This
+// unintuitive looking formula comes from the fact that without the amount to
+// forward, we cannot compute the fees taken directly.
+//
+// The amount to be forwarded can be computed as follows:
+//
+// amt_to_forward = incoming_amount - total_fees
+// total_fees = base_fee + amt_to_forward*(fee_rate/1000000)
+//
+// Solving for amount_to_forward:
+// amt_to_forward = incoming_amount - base_fee - (amount_to_forward * fee_rate)/1e6
+// amt_to_forward + (amount_to_forward * fee_rate) / 1e6 = incoming_amount - base_fee
+// amt_to_forward * 1e6 + (amount_to_forward * fee_rate) = (incoming_amount - base_fee) * 1e6
+// amt_to_forward * (1e6 + fee_rate) = (incoming_amount - base_fee) * 1e6
+// amt_to_forward = ((incoming_amount - base_fee) * 1e6) / (1e6 + fee_rate)
+//
+// From there we use a ceiling formula for integer division so that we always
+// round up, otherwise the sender may receive slightly less than intended:
+//
+// ceil(a/b) = (a + b - 1)/(b).
+//
+//nolint:lll,dupword
+func calculateForwardingAmount(incomingAmount lnwire.MilliSatoshi, baseFee,
+	proportionalFee uint32) (lnwire.MilliSatoshi, error) {
+
+	// Sanity check to prevent overflow.
+	if incomingAmount < lnwire.MilliSatoshi(baseFee) {
+		return 0, fmt.Errorf("incoming amount: %v < base fee: %v",
+			incomingAmount, baseFee)
+	}
+	numerator := (uint64(incomingAmount) - uint64(baseFee)) * 1e6
+	denominator := 1e6 + uint64(proportionalFee)
+
+	ceiling := (numerator + denominator - 1) / denominator
+
+	return lnwire.MilliSatoshi(ceiling), nil
+}
+
 // OnionProcessor is responsible for keeping all sphinx dependent parts inside
 // and expose only decoding function. With such approach we give freedom for
 // subsystems which wants to decode sphinx path to not be dependable from
diff --git a/htlcswitch/hop/iterator_test.go b/htlcswitch/hop/iterator_test.go
index cb2a2816f..74eb60a7a 100644
--- a/htlcswitch/hop/iterator_test.go
+++ b/htlcswitch/hop/iterator_test.go
@@ -100,3 +100,56 @@ func TestSphinxHopIteratorForwardingInstructions(t *testing.T) {
 		}
 	}
 }
+
+// TestForwardingAmountCalc tests calculation of forwarding amounts from the
+// hop's forwarding parameters.
+func TestForwardingAmountCalc(t *testing.T) {
+	t.Parallel()
+
+	tests := []struct {
+		name           string
+		incomingAmount lnwire.MilliSatoshi
+		baseFee        uint32
+		proportional   uint32
+		forwardAmount  lnwire.MilliSatoshi
+		expectErr      bool
+	}{
+		{
+			name:           "overflow",
+			incomingAmount: 10,
+			baseFee:        100,
+			expectErr:      true,
+		},
+		{
+			name:           "trivial proportional",
+			incomingAmount: 100_000,
+			baseFee:        1000,
+			proportional:   10,
+			forwardAmount:  99000,
+		},
+		{
+			name:           "both fees charged",
+			incomingAmount: 10_002_020,
+			baseFee:        1000,
+			proportional:   1,
+			forwardAmount:  10_001_010,
+		},
+	}
+
+	for _, testCase := range tests {
+		testCase := testCase
+
+		t.Run(testCase.name, func(t *testing.T) {
+			t.Parallel()
+
+			actual, err := calculateForwardingAmount(
+				testCase.incomingAmount, testCase.baseFee,
+				testCase.proportional,
+			)
+
+			require.Equal(t, testCase.expectErr, err != nil)
+			require.Equal(t, testCase.forwardAmount.ToSatoshis(),
+				actual.ToSatoshis())
+		})
+	}
+}