From c528ff36503f3074b076caf639a7dbf14f1b1fd6 Mon Sep 17 00:00:00 2001
From: Matt Corallo <git@bluematt.me>
Date: Mon, 26 Mar 2018 16:48:18 -0400
Subject: [PATCH] Handle incoming shutdown messages

---
 fuzz/fuzz_targets/channel_target.rs    |   8 +
 fuzz/fuzz_targets/full_stack_target.rs |  11 +-
 src/ln/channel.rs                      | 323 +++++++++++++++++++++++--
 src/ln/channelmanager.rs               |  81 +++++--
 src/ln/msgs.rs                         |   4 +-
 src/ln/peer_handler.rs                 |  13 +-
 src/util/test_utils.rs                 |  10 +
 7 files changed, 410 insertions(+), 40 deletions(-)

diff --git a/fuzz/fuzz_targets/channel_target.rs b/fuzz/fuzz_targets/channel_target.rs
index 0dd0d6a7..d07b342d 100644
--- a/fuzz/fuzz_targets/channel_target.rs
+++ b/fuzz/fuzz_targets/channel_target.rs
@@ -248,6 +248,14 @@ pub fn do_test(data: &[u8]) {
 				let update_fee = decode_msg!(msgs::UpdateFee, 32+4);
 				return_err!(channel.update_fee(&fee_est, &update_fee));
 			},
+			9 => {
+				let shutdown = decode_msg_with_len16!(msgs::Shutdown, 32, 1);
+				return_err!(channel.shutdown(&fee_est, &shutdown));
+			},
+			10 => {
+				let closing_signed = decode_msg!(msgs::ClosingSigned, 32+8+64);
+				return_err!(channel.closing_signed(&fee_est, &closing_signed));
+			},
 			_ => return,
 		}
 	}
diff --git a/fuzz/fuzz_targets/full_stack_target.rs b/fuzz/fuzz_targets/full_stack_target.rs
index 0264bbef..c7ad6d49 100644
--- a/fuzz/fuzz_targets/full_stack_target.rs
+++ b/fuzz/fuzz_targets/full_stack_target.rs
@@ -2,10 +2,11 @@ extern crate bitcoin;
 extern crate lightning;
 extern crate secp256k1;
 
+use bitcoin::blockdata::transaction::Transaction;
 use bitcoin::network::constants::Network;
 use bitcoin::util::hash::Sha256dHash;
 
-use lightning::chain::chaininterface::{ConfirmationTarget,FeeEstimator,ChainWatchInterfaceUtil};
+use lightning::chain::chaininterface::{BroadcasterInterface,ConfirmationTarget,FeeEstimator,ChainWatchInterfaceUtil};
 use lightning::ln::{channelmonitor,msgs};
 use lightning::ln::channelmanager::ChannelManager;
 use lightning::ln::peer_handler::{MessageHandler,PeerManager,SocketDescriptor};
@@ -73,6 +74,11 @@ impl channelmonitor::ManyChannelMonitor for TestChannelMonitor {
 	}
 }
 
+struct TestBroadcaster {}
+impl BroadcasterInterface for TestBroadcaster {
+	fn broadcast_transaction(&self, _tx: &Transaction) {}
+}
+
 #[derive(Clone, PartialEq, Eq, Hash)]
 struct Peer {
 	id: u8,
@@ -120,8 +126,9 @@ pub fn do_test(data: &[u8]) {
 
 	let monitor = Arc::new(TestChannelMonitor{});
 	let watch = Arc::new(ChainWatchInterfaceUtil::new());
+	let broadcast = Arc::new(TestBroadcaster{});
 
-	let channelmanager = ChannelManager::new(our_network_key, slice_to_be32(get_slice!(4)), get_slice!(1)[0] != 0, Network::Bitcoin, fee_est.clone(), monitor.clone(), watch.clone()).unwrap();
+	let channelmanager = ChannelManager::new(our_network_key, slice_to_be32(get_slice!(4)), get_slice!(1)[0] != 0, Network::Bitcoin, fee_est.clone(), monitor.clone(), watch.clone(), broadcast.clone()).unwrap();
 	let router = Arc::new(Router::new(PublicKey::from_secret_key(&secp_ctx, &our_network_key).unwrap()));
 
 	let handler = PeerManager::new(MessageHandler {
diff --git a/src/ln/channel.rs b/src/ln/channel.rs
index 6f51c0a6..08fa3efb 100644
--- a/src/ln/channel.rs
+++ b/src/ln/channel.rs
@@ -149,7 +149,20 @@ enum ChannelState {
 	/// later.
 	/// Flag is set on ChannelFunded.
 	AwaitingRemoteRevoke = (1 << 7),
+	/// Flag which is set on ChannelFunded or FundingSent after receiving a shutdown message from
+	/// the remote end. If set, they may not add any new HTLCs to the channel, and we are expected
+	/// to respond with our own shutdown message when possible.
+	RemoteShutdownSent = (1 << 8),
+	/// Flag which is set on ChannelFunded or FundingSent after sending a shutdown message. At this
+	/// point, we may not add any new HTLCs to the channel.
+	/// TODO: Investigate some kind of timeout mechanism by which point the remote end must provide
+	/// us their shutdown.
+	LocalShutdownSent = (1 << 9),
+	/// We've successfully negotiated a closing_signed dance. At this point ChannelManager is about
+	/// to drop us, but we store this anyway.
+	ShutdownComplete = (1 << 10),
 }
+const BOTH_SIDES_SHUTDOWN_MASK: u32 = (ChannelState::LocalShutdownSent as u32 | ChannelState::RemoteShutdownSent as u32);
 
 // TODO: We should refactor this to be an Inbound/OutboundChannel until initial setup handshaking
 // has been completed, and then turn into a Channel to get compiler-time enforcement of things like
@@ -177,6 +190,8 @@ pub struct Channel {
 	channel_update_count: u32,
 	feerate_per_kw: u64,
 
+	last_sent_closing_fee: Option<(u64, u64)>, // (feerate, fee)
+
 	/// The hash of the block in which the funding transaction reached our CONF_TARGET. We use this
 	/// to detect unconfirmation after a serialize-unserialize roudtrip where we may not see a full
 	/// series of block_connected/block_disconnected calls. Obviously this is not a guarantee as we
@@ -208,6 +223,8 @@ pub struct Channel {
 	their_cur_commitment_point: PublicKey,
 	their_node_id: PublicKey,
 
+	their_shutdown_scriptpubkey: Option<Script>,
+
 	channel_monitor: ChannelMonitor,
 }
 
@@ -310,6 +327,8 @@ impl Channel {
 			next_remote_htlc_id: 0,
 			channel_update_count: 0,
 
+			last_sent_closing_fee: None,
+
 			funding_tx_confirmed_in: Default::default(),
 			short_channel_id: None,
 			last_block_connected: Default::default(),
@@ -333,6 +352,8 @@ impl Channel {
 			their_cur_commitment_point: PublicKey::new(),
 			their_node_id: their_node_id,
 
+			their_shutdown_scriptpubkey: None,
+
 			channel_monitor: channel_monitor,
 		}
 	}
@@ -424,6 +445,8 @@ impl Channel {
 			next_remote_htlc_id: 0,
 			channel_update_count: 0,
 
+			last_sent_closing_fee: None,
+
 			funding_tx_confirmed_in: Default::default(),
 			short_channel_id: None,
 			last_block_connected: Default::default(),
@@ -448,6 +471,8 @@ impl Channel {
 			their_cur_commitment_point: msg.first_per_commitment_point,
 			their_node_id: their_node_id,
 
+			their_shutdown_scriptpubkey: None,
+
 			channel_monitor: channel_monitor,
 		};
 
@@ -598,6 +623,75 @@ impl Channel {
 		}, htlcs_used))
 	}
 
+	#[inline]
+	fn get_closing_scriptpubkey(&self) -> Script {
+		let our_channel_close_key_hash = Hash160::from_data(&PublicKey::from_secret_key(&self.secp_ctx, &self.local_keys.channel_close_key).unwrap().serialize());
+		Builder::new().push_opcode(opcodes::All::OP_PUSHBYTES_0).push_slice(&our_channel_close_key_hash[..]).into_script()
+	}
+
+	#[inline]
+	fn get_closing_transaction_weight(a_scriptpubkey: &Script, b_scriptpubkey: &Script) -> u64 {
+		(4 + 1 + 36 + 4 + 1 + 1 + 2*(8+1) + 4 + a_scriptpubkey.len() as u64 + b_scriptpubkey.len() as u64)*4 + 2 + 1 + 1 + 2*(1 + 72)
+	}
+
+	#[inline]
+	fn build_closing_transaction(&self, proposed_total_fee_satoshis: u64, skip_remote_output: bool) -> (Transaction, u64) {
+		let txins = {
+			let mut ins: Vec<TxIn> = Vec::new();
+			ins.push(TxIn {
+				prev_hash: self.channel_monitor.get_funding_txo().unwrap().0,
+				prev_index: self.channel_monitor.get_funding_txo().unwrap().1 as u32,
+				script_sig: Script::new(),
+				sequence: 0xffffffff,
+				witness: Vec::new(),
+			});
+			ins
+		};
+
+		assert!(self.pending_htlcs.is_empty());
+		let mut txouts: Vec<(TxOut, ())> = Vec::new();
+
+		let mut total_fee_satoshis = proposed_total_fee_satoshis;
+		let value_to_self: i64 = (self.value_to_self_msat as i64) / 1000 - if self.channel_outbound { total_fee_satoshis as i64 } else { 0 };
+		let value_to_remote: i64 = ((self.channel_value_satoshis * 1000 - self.value_to_self_msat) as i64 / 1000) - if self.channel_outbound { 0 } else { total_fee_satoshis as i64 };
+
+		if value_to_self < 0 {
+			assert!(self.channel_outbound);
+			total_fee_satoshis += (-value_to_self) as u64;
+		} else if value_to_remote < 0 {
+			assert!(!self.channel_outbound);
+			total_fee_satoshis += (-value_to_remote) as u64;
+		}
+
+		if !skip_remote_output && value_to_remote as u64 > self.our_dust_limit_satoshis {
+			txouts.push((TxOut {
+				script_pubkey: self.their_shutdown_scriptpubkey.clone().unwrap(),
+				value: value_to_remote as u64
+			}, ()));
+		}
+
+		if value_to_self as u64 > self.our_dust_limit_satoshis {
+			txouts.push((TxOut {
+				script_pubkey: self.get_closing_scriptpubkey(),
+				value: value_to_self as u64
+			}, ()));
+		}
+
+		transaction_utils::sort_outputs(&mut txouts);
+
+		let mut outputs: Vec<TxOut> = Vec::new();
+		for out in txouts.drain(..) {
+			outputs.push(out.0);
+		}
+
+		(Transaction {
+			version: 2,
+			lock_time: 0,
+			input: txins,
+			output: outputs,
+		}, total_fee_satoshis)
+	}
+
 	#[inline]
 	/// Creates a set of keys for build_commitment_transaction to generate a transaction which our
 	/// counterparty will sign (ie DO NOT send signatures over a transaction created by this to
@@ -640,7 +734,7 @@ impl Channel {
 		}.push_opcode(opcodes::All::OP_PUSHNUM_2).push_opcode(opcodes::All::OP_CHECKMULTISIG).into_script()
 	}
 
-	fn sign_commitment_transaction(&self, tx: &mut Transaction, their_sig: &Signature) -> Result<(), HandleError> {
+	fn sign_commitment_transaction(&self, tx: &mut Transaction, their_sig: &Signature) -> Signature {
 		if tx.input.len() != 1 {
 			panic!("Tried to sign commitment transaction that had input count != 1!");
 		}
@@ -650,8 +744,8 @@ impl Channel {
 
 		let funding_redeemscript = self.get_funding_redeemscript();
 
-		let sighash = secp_call!(Message::from_slice(&bip143::SighashComponents::new(&tx).sighash_all(&tx.input[0], &funding_redeemscript, self.channel_value_satoshis)[..]));
-		let our_sig = secp_call!(self.secp_ctx.sign(&sighash, &self.local_keys.funding_key));
+		let sighash = Message::from_slice(&bip143::SighashComponents::new(&tx).sighash_all(&tx.input[0], &funding_redeemscript, self.channel_value_satoshis)[..]).unwrap();
+		let our_sig = self.secp_ctx.sign(&sighash, &self.local_keys.funding_key).unwrap();
 
 		tx.input[0].witness.push(Vec::new()); // First is the multisig dummy
 
@@ -669,7 +763,7 @@ impl Channel {
 
 		tx.input[0].witness.push(funding_redeemscript.into_vec());
 
-		Ok(())
+		our_sig
 	}
 
 	/// Builds the htlc-success or htlc-timeout transaction which spends a given HTLC output
@@ -752,6 +846,7 @@ impl Channel {
 		if (self.channel_state & (ChannelState::ChannelFunded as u32)) != (ChannelState::ChannelFunded as u32) {
 			return Err(HandleError{err: "Was asked to fulfill an HTLC when channel was not in an operational state", msg: None});
 		}
+		assert_eq!(self.channel_state & ChannelState::ShutdownComplete as u32, 0);
 
 		let mut sha = Sha256::new();
 		sha.input(&payment_preimage);
@@ -789,6 +884,7 @@ impl Channel {
 		if (self.channel_state & (ChannelState::ChannelFunded as u32)) != (ChannelState::ChannelFunded as u32) {
 			return Err(HandleError{err: "Was asked to fail an HTLC when channel was not in an operational state", msg: None});
 		}
+		assert_eq!(self.channel_state & ChannelState::ShutdownComplete as u32, 0);
 
 		let mut htlc_id = 0;
 		let mut htlc_amount_msat = 0;
@@ -952,12 +1048,13 @@ impl Channel {
 	}
 
 	pub fn funding_locked(&mut self, msg: &msgs::FundingLocked) -> Result<(), HandleError> {
-		if self.channel_state == ChannelState::FundingSent as u32 {
+		let non_shutdown_state = self.channel_state & (!BOTH_SIDES_SHUTDOWN_MASK);
+		if non_shutdown_state == ChannelState::FundingSent as u32 {
 			self.channel_state |= ChannelState::TheirFundingLocked as u32;
-		} else if self.channel_state == (ChannelState::FundingSent as u32 | ChannelState::OurFundingLocked as u32) {
-			self.channel_state = ChannelState::ChannelFunded as u32;
-		} else if self.channel_state < ChannelState::FundingSent as u32 {
-			return Err(HandleError{err: "Peer sent a funding_locked before we'd even been told the funding txid", msg: None});
+		} else if non_shutdown_state == (ChannelState::FundingSent as u32 | ChannelState::OurFundingLocked as u32) {
+			self.channel_state = ChannelState::ChannelFunded as u32 | (self.channel_state & BOTH_SIDES_SHUTDOWN_MASK);
+		} else {
+			return Err(HandleError{err: "Peer sent a funding_locked at a strange time", msg: None});
 		}
 
 		//TODO: Note that this must be a duplicate of the previous commitment point they sent us,
@@ -990,7 +1087,7 @@ impl Channel {
 	}
 
 	pub fn update_add_htlc(&mut self, msg: &msgs::UpdateAddHTLC, pending_forward_state: PendingForwardHTLCInfo) -> Result<(), HandleError> {
-		if (self.channel_state & (ChannelState::ChannelFunded as u32)) != (ChannelState::ChannelFunded as u32) {
+		if (self.channel_state & (ChannelState::ChannelFunded as u32 | ChannelState::RemoteShutdownSent as u32)) != (ChannelState::ChannelFunded as u32) {
 			return Err(HandleError{err: "Got add HTLC message when channel was not in an operational state", msg: None});
 		}
 		if msg.amount_msat > self.channel_value_satoshis * 1000 {
@@ -1240,6 +1337,179 @@ impl Channel {
 		Ok(())
 	}
 
+	pub fn shutdown(&mut self, fee_estimator: &FeeEstimator, msg: &msgs::Shutdown) -> Result<(Option<msgs::Shutdown>, Option<msgs::ClosingSigned>, Vec<[u8; 32]>), HandleError> {
+		if self.channel_state < ChannelState::FundingSent as u32 {
+			self.channel_state = ChannelState::ShutdownComplete as u32;
+			return Ok((None, None, Vec::new()));
+		}
+		for htlc in self.pending_htlcs.iter() {
+			if htlc.state == HTLCState::RemoteAnnounced {
+				return Err(HandleError{err: "Got shutdown with remote pending HTLCs", msg: None});
+			}
+		}
+		if (self.channel_state & ChannelState::RemoteShutdownSent as u32) == ChannelState::RemoteShutdownSent as u32 {
+			return Err(HandleError{err: "Remote peer sent duplicate shutdown message", msg: None});
+		}
+		assert_eq!(self.channel_state & ChannelState::ShutdownComplete as u32, 0);
+
+		// BOLT 2 says we must only send a scriptpubkey of certain standard forms, which are up to
+		// 34 bytes in length, so dont let the remote peer feed us some super fee-heavy script.
+		if self.channel_outbound && msg.scriptpubkey.len() > 34 {
+			return Err(HandleError{err: "Got shutdown_scriptpubkey of absurd length from remote peer", msg: None});
+		}
+		//TODO: Check shutdown_scriptpubkey form as BOLT says we must? WHYYY
+
+		if self.their_shutdown_scriptpubkey.is_some() {
+			if Some(&msg.scriptpubkey) != self.their_shutdown_scriptpubkey.as_ref() {
+				return Err(HandleError{err: "Got shutdown request with a scriptpubkey which did not match their previous scriptpubkey", msg: None});
+			}
+		} else {
+			self.their_shutdown_scriptpubkey = Some(msg.scriptpubkey.clone());
+		}
+
+		let our_closing_script = self.get_closing_scriptpubkey();
+
+		let (proposed_feerate, proposed_fee, our_sig) = if self.channel_outbound && self.pending_htlcs.is_empty() {
+			let mut proposed_feerate = fee_estimator.get_est_sat_per_vbyte(ConfirmationTarget::Background);
+			if self.feerate_per_kw > proposed_feerate * 250 {
+				proposed_feerate = self.feerate_per_kw / 250;
+			}
+			let tx_weight = Self::get_closing_transaction_weight(&our_closing_script, &msg.scriptpubkey);
+			let proposed_total_fee_satoshis = proposed_feerate * tx_weight / 4;
+
+			let (closing_tx, total_fee_satoshis) = self.build_closing_transaction(proposed_total_fee_satoshis, false);
+			let funding_redeemscript = self.get_funding_redeemscript();
+			let sighash = secp_call!(Message::from_slice(&bip143::SighashComponents::new(&closing_tx).sighash_all(&closing_tx.input[0], &funding_redeemscript, self.channel_value_satoshis)[..]));
+
+			(Some(proposed_feerate), Some(total_fee_satoshis), Some(secp_call!(self.secp_ctx.sign(&sighash, &self.local_keys.funding_key))))
+		} else { (None, None, None) };
+
+		// From here on out, we may not fail!
+
+		self.channel_state |= ChannelState::RemoteShutdownSent as u32;
+
+		// We can't send our shutdown until we've committed all of our pending HTLCs, but the
+		// remote side is unlikely to accept any new HTLCs, so we go ahead and "free" any holding
+		// cell HTLCs and return them to fail the payment.
+		let mut dropped_outbound_htlcs = Vec::with_capacity(self.holding_cell_htlcs.len());
+		for htlc in self.holding_cell_htlcs.drain(..) {
+			dropped_outbound_htlcs.push(htlc.payment_hash);
+		}
+		for htlc in self.pending_htlcs.iter() {
+			if htlc.state == HTLCState::LocalAnnounced {
+				return Ok((None, None, dropped_outbound_htlcs));
+			}
+		}
+
+		let our_shutdown = if (self.channel_state & ChannelState::LocalShutdownSent as u32) == ChannelState::LocalShutdownSent as u32 {
+			None
+		} else {
+			Some(msgs::Shutdown {
+				channel_id: self.channel_id,
+				scriptpubkey: our_closing_script,
+			})
+		};
+
+		self.channel_state |= ChannelState::LocalShutdownSent as u32;
+		if self.pending_htlcs.is_empty() && self.channel_outbound {
+			// There are no more HTLCs and we're the funder, this means we start the closing_signed
+			// dance with an initial fee proposal!
+			self.last_sent_closing_fee = Some((proposed_feerate.unwrap(), proposed_fee.unwrap()));
+			Ok((our_shutdown, Some(msgs::ClosingSigned {
+				channel_id: self.channel_id,
+				fee_satoshis: proposed_fee.unwrap(),
+				signature: our_sig.unwrap(),
+			}), dropped_outbound_htlcs))
+		} else {
+			Ok((our_shutdown, None, dropped_outbound_htlcs))
+		}
+	}
+
+	pub fn closing_signed(&mut self, fee_estimator: &FeeEstimator, msg: &msgs::ClosingSigned) -> Result<(Option<msgs::ClosingSigned>, Option<Transaction>), HandleError> {
+		if self.channel_state & BOTH_SIDES_SHUTDOWN_MASK != BOTH_SIDES_SHUTDOWN_MASK {
+			return Err(HandleError{err: "Remote end sent us a closing_signed before both sides provided a shutdown", msg: None});
+		}
+		if !self.pending_htlcs.is_empty() {
+			return Err(HandleError{err: "Remote end sent us a closing_signed while there were still pending HTLCs", msg: None});
+		}
+		if msg.fee_satoshis > 21000000 * 10000000 {
+			return Err(HandleError{err: "Remote tried to send us a closing tx with > 21 million BTC fee", msg: None});
+		}
+
+		let funding_redeemscript = self.get_funding_redeemscript();
+		let (mut closing_tx, used_total_fee) = self.build_closing_transaction(msg.fee_satoshis, false);
+		if used_total_fee != msg.fee_satoshis {
+			return Err(HandleError{err: "Remote sent us a closing_signed with a fee greater than the value they can claim", msg: None});
+		}
+		let mut sighash = secp_call!(Message::from_slice(&bip143::SighashComponents::new(&closing_tx).sighash_all(&closing_tx.input[0], &funding_redeemscript, self.channel_value_satoshis)[..]));
+
+		match self.secp_ctx.verify(&sighash, &msg.signature, &self.their_funding_pubkey) {
+			Ok(_) => {},
+			Err(_) => {
+				// The remote end may have decided to revoke their output due to inconsistent dust
+				// limits, so check for that case by re-checking the signature here.
+				closing_tx = self.build_closing_transaction(msg.fee_satoshis, true).0;
+				sighash = secp_call!(Message::from_slice(&bip143::SighashComponents::new(&closing_tx).sighash_all(&closing_tx.input[0], &funding_redeemscript, self.channel_value_satoshis)[..]));
+				secp_call!(self.secp_ctx.verify(&sighash, &msg.signature, &self.their_funding_pubkey));
+			},
+		};
+
+		if let Some((_, last_fee)) = self.last_sent_closing_fee {
+			if last_fee == msg.fee_satoshis {
+				self.sign_commitment_transaction(&mut closing_tx, &msg.signature);
+				self.channel_state = ChannelState::ShutdownComplete as u32;
+				return Ok((None, Some(closing_tx)));
+			}
+		}
+
+		macro_rules! propose_new_feerate {
+			($new_feerate: expr) => {
+				let closing_tx_max_weight = Self::get_closing_transaction_weight(&self.get_closing_scriptpubkey(), self.their_shutdown_scriptpubkey.as_ref().unwrap());
+				let (closing_tx, used_total_fee) = self.build_closing_transaction($new_feerate * closing_tx_max_weight / 4, false);
+				sighash = secp_call!(Message::from_slice(&bip143::SighashComponents::new(&closing_tx).sighash_all(&closing_tx.input[0], &funding_redeemscript, self.channel_value_satoshis)[..]));
+				let our_sig = self.secp_ctx.sign(&sighash, &self.local_keys.funding_key).unwrap();
+				self.last_sent_closing_fee = Some(($new_feerate, used_total_fee));
+				return Ok((Some(msgs::ClosingSigned {
+					channel_id: self.channel_id,
+					fee_satoshis: used_total_fee,
+					signature: our_sig,
+				}), None))
+			}
+		}
+
+		let proposed_sat_per_vbyte = msg.fee_satoshis * 4 / closing_tx.get_weight();
+		if self.channel_outbound {
+			let our_max_feerate = fee_estimator.get_est_sat_per_vbyte(ConfirmationTarget::Normal);
+			if proposed_sat_per_vbyte > our_max_feerate {
+				if let Some((last_feerate, _)) = self.last_sent_closing_fee {
+					if our_max_feerate <= last_feerate {
+						return Err(HandleError{err: "Unable to come to consensus about closing feerate, remote wanted something higher than our Normal feerate", msg: None});
+					}
+				}
+				propose_new_feerate!(our_max_feerate);
+			}
+		} else {
+			let our_min_feerate = fee_estimator.get_est_sat_per_vbyte(ConfirmationTarget::Background);
+			if proposed_sat_per_vbyte < our_min_feerate {
+				if let Some((last_feerate, _)) = self.last_sent_closing_fee {
+					if our_min_feerate >= last_feerate {
+						return Err(HandleError{err: "Unable to come to consensus about closing feerate, remote wanted something lower than our Background feerate", msg: None});
+					}
+				}
+				propose_new_feerate!(our_min_feerate);
+			}
+		}
+
+		let our_sig = self.sign_commitment_transaction(&mut closing_tx, &msg.signature);
+		self.channel_state = ChannelState::ShutdownComplete as u32;
+
+		Ok((Some(msgs::ClosingSigned {
+			channel_id: self.channel_id,
+			fee_satoshis: msg.fee_satoshis,
+			signature: our_sig,
+		}), Some(closing_tx)))
+	}
+
 	// Public utilities:
 
 	pub fn channel_id(&self) -> Uint256 {
@@ -1309,7 +1579,8 @@ impl Channel {
 
 	/// Returns true if this channel is fully established and not known to be closing.
 	pub fn is_usable(&self) -> bool {
-		(self.channel_state & (ChannelState::ChannelFunded as u32)) == (ChannelState::ChannelFunded as u32)
+		let mask = ChannelState::ChannelFunded as u32 | BOTH_SIDES_SHUTDOWN_MASK;
+		(self.channel_state & mask) == (ChannelState::ChannelFunded as u32)
 	}
 
 	/// Returns true if this channel is currently available for use. This is a superset of
@@ -1318,19 +1589,30 @@ impl Channel {
 		self.is_usable()
 	}
 
+	/// Returns true if this channel is fully shut down. True here implies that no further actions
+	/// may/will be taken on this channel, and thus this object should be freed. Any future changes
+	/// will be handled appropriately by the chain monitor.
+	pub fn is_shutdown(&self) -> bool {
+		if (self.channel_state & ChannelState::ShutdownComplete as u32) == ChannelState::ShutdownComplete as u32  {
+			assert!(self.channel_state == ChannelState::ShutdownComplete as u32);
+			true
+		} else { false }
+	}
+
 	/// Called by channelmanager based on chain blocks being connected.
 	/// Note that we only need to use this to detect funding_signed, anything else is handled by
 	/// the channel_monitor.
 	pub fn block_connected(&mut self, header: &BlockHeader, height: u32, txn_matched: &[&Transaction], indexes_of_txn_matched: &[u32]) -> Option<msgs::FundingLocked> {
+		let non_shutdown_state = self.channel_state & (!BOTH_SIDES_SHUTDOWN_MASK);
 		if self.funding_tx_confirmations > 0 {
 			if header.bitcoin_hash() != self.last_block_connected {
 				self.last_block_connected = header.bitcoin_hash();
 				self.funding_tx_confirmations += 1;
 				if self.funding_tx_confirmations == CONF_TARGET as u64 {
-					if self.channel_state == ChannelState::FundingSent as u32 {
+					if non_shutdown_state == ChannelState::FundingSent as u32 {
 						self.channel_state |= ChannelState::OurFundingLocked as u32;
-					} else if self.channel_state == (ChannelState::FundingSent as u32 | ChannelState::TheirFundingLocked as u32) {
-						self.channel_state = ChannelState::ChannelFunded as u32;
+					} else if non_shutdown_state == (ChannelState::FundingSent as u32 | ChannelState::TheirFundingLocked as u32) {
+						self.channel_state = ChannelState::ChannelFunded as u32 | (self.channel_state & BOTH_SIDES_SHUTDOWN_MASK);
 						//TODO: Something about a state where we "lost confirmation"
 					} else if self.channel_state < ChannelState::ChannelFunded as u32 {
 						panic!("Started confirming a channel in a state pre-FundingSent?");
@@ -1354,7 +1636,7 @@ impl Channel {
 				}
 			}
 		}
-		if self.channel_state & !(ChannelState::TheirFundingLocked as u32) == ChannelState::FundingSent as u32 {
+		if non_shutdown_state & !(ChannelState::TheirFundingLocked as u32) == ChannelState::FundingSent as u32 {
 			for (ref tx, index_in_block) in txn_matched.iter().zip(indexes_of_txn_matched) {
 				if tx.txid() == self.channel_monitor.get_funding_txo().unwrap().0 {
 					self.funding_tx_confirmations = 1;
@@ -1513,11 +1795,14 @@ impl Channel {
 	/// bitcoin_key, if available, for this channel. The channel must be publicly announceable and
 	/// available for use (have exchanged FundingLocked messages in both directions. Should be used
 	/// for both loose and in response to an AnnouncementSignatures message from the remote peer.
+	/// Note that you can get an announcement for a channel which is closing, though you should
+	/// likely not announce such a thing. In case its already been announced, a channel_update
+	/// message can mark the channel disabled.
 	pub fn get_channel_announcement(&self, our_node_id: PublicKey, chain_hash: Sha256dHash) -> Result<(msgs::UnsignedChannelAnnouncement, Signature), HandleError> {
 		if !self.announce_publicly {
 			return Err(HandleError{err: "Channel is not available for public announcements", msg: None});
 		}
-		if self.channel_state < ChannelState::ChannelFunded as u32 {
+		if self.channel_state & (ChannelState::ChannelFunded as u32) != (ChannelState::ChannelFunded as u32) {
 			return Err(HandleError{err: "Cannot get a ChannelAnnouncement until the channel funding has been locked", msg: None});
 		}
 
@@ -1549,8 +1834,8 @@ impl Channel {
 	/// waiting on the remote peer to send us a revoke_and_ack during which time we cannot add new
 	/// HTLCs on the wire or we wouldn't be able to determine what they actually ACK'ed.
 	pub fn send_htlc(&mut self, amount_msat: u64, payment_hash: [u8; 32], cltv_expiry: u32, onion_routing_packet: msgs::OnionPacket) -> Result<Option<msgs::UpdateAddHTLC>, HandleError> {
-		if (self.channel_state & (ChannelState::ChannelFunded as u32)) != (ChannelState::ChannelFunded as u32) {
-			return Err(HandleError{err: "Cannot send HTLC until channel is fully established", msg: None});
+		if (self.channel_state & (ChannelState::ChannelFunded as u32 | BOTH_SIDES_SHUTDOWN_MASK)) != (ChannelState::ChannelFunded as u32) {
+			return Err(HandleError{err: "Cannot send HTLC until channel is fully established and we haven't started shutting down", msg: None});
 		}
 
 		if amount_msat > self.channel_value_satoshis * 1000 {
@@ -1749,7 +2034,7 @@ mod tests {
 				let sighash = Message::from_slice(&bip143::SighashComponents::new(&unsigned_tx.0).sighash_all(&unsigned_tx.0.input[0], &chan.get_funding_redeemscript(), chan.channel_value_satoshis)[..]).unwrap();
 				secp_ctx.verify(&sighash, &their_signature, &chan.their_funding_pubkey).unwrap();
 
-				chan.sign_commitment_transaction(&mut unsigned_tx.0, &their_signature).unwrap();
+				chan.sign_commitment_transaction(&mut unsigned_tx.0, &their_signature);
 
 				assert_eq!(serialize(&unsigned_tx.0).unwrap()[..],
 						hex_bytes($tx_hex).unwrap()[..]);
diff --git a/src/ln/channelmanager.rs b/src/ln/channelmanager.rs
index 96764523..4f165317 100644
--- a/src/ln/channelmanager.rs
+++ b/src/ln/channelmanager.rs
@@ -11,7 +11,7 @@ use secp256k1::{Secp256k1,Message};
 use secp256k1::ecdh::SharedSecret;
 use secp256k1;
 
-use chain::chaininterface::{ChainListener,ChainWatchInterface,FeeEstimator};
+use chain::chaininterface::{BroadcasterInterface,ChainListener,ChainWatchInterface,FeeEstimator};
 use ln::channel::Channel;
 use ln::channelmonitor::ManyChannelMonitor;
 use ln::router::Route;
@@ -126,6 +126,7 @@ pub struct ChannelManager {
 	fee_estimator: Arc<FeeEstimator>,
 	monitor: Arc<ManyChannelMonitor>,
 	chain_monitor: Arc<ChainWatchInterface>,
+	tx_broadcaster: Arc<BroadcasterInterface>,
 
 	announce_channels_publicly: bool,
 	fee_proportional_millionths: u32,
@@ -165,18 +166,19 @@ impl ChannelManager {
 	/// fee_proportional_millionths is an optional fee to charge any payments routed through us.
 	/// Non-proportional fees are fixed according to our risk using the provided fee estimator.
 	/// panics if channel_value_satoshis is >= (1 << 24)!
-	pub fn new(our_network_key: SecretKey, fee_proportional_millionths: u32, announce_channels_publicly: bool, network: Network, feeest: Arc<FeeEstimator>, monitor: Arc<ManyChannelMonitor>, chain_monitor: Arc<ChainWatchInterface>) -> Result<Arc<ChannelManager>, secp256k1::Error> {
+	pub fn new(our_network_key: SecretKey, fee_proportional_millionths: u32, announce_channels_publicly: bool, network: Network, feeest: Arc<FeeEstimator>, monitor: Arc<ManyChannelMonitor>, chain_monitor: Arc<ChainWatchInterface>, tx_broadcaster: Arc<BroadcasterInterface>) -> Result<Arc<ChannelManager>, secp256k1::Error> {
 		let secp_ctx = Secp256k1::new();
 
 		let res = Arc::new(ChannelManager {
 			genesis_hash: genesis_block(network).header.bitcoin_hash(),
 			fee_estimator: feeest.clone(),
 			monitor: monitor.clone(),
-			chain_monitor: chain_monitor,
+			chain_monitor,
+			tx_broadcaster,
 
-			announce_channels_publicly: announce_channels_publicly,
-			fee_proportional_millionths: fee_proportional_millionths,
-			secp_ctx: secp_ctx,
+			announce_channels_publicly,
+			fee_proportional_millionths,
+			secp_ctx,
 
 			channel_state: Mutex::new(ChannelHolder{
 				by_id: HashMap::new(),
@@ -185,7 +187,7 @@ impl ChannelManager {
 				forward_htlcs: HashMap::new(),
 				claimable_htlcs: HashMap::new(),
 			}),
-			our_network_key: our_network_key,
+			our_network_key,
 
 			pending_events: Mutex::new(Vec::new()),
 		});
@@ -978,12 +980,57 @@ impl ChannelMessageHandler for ChannelManager {
 		};
 	}
 
-	fn handle_shutdown(&self, _their_node_id: &PublicKey, _msg: &msgs::Shutdown) -> Result<(), HandleError> {
-		unimplemented!()
+	fn handle_shutdown(&self, their_node_id: &PublicKey, msg: &msgs::Shutdown) -> Result<(Option<msgs::Shutdown>, Option<msgs::ClosingSigned>), HandleError> {
+		let res = {
+			let mut channel_state = self.channel_state.lock().unwrap();
+
+			match channel_state.by_id.entry(msg.channel_id.clone()) {
+				hash_map::Entry::Occupied(mut chan_entry) => {
+					if chan_entry.get().get_their_node_id() != *their_node_id {
+						return Err(HandleError{err: "Got a message for a channel from the wrong node!", msg: None})
+					}
+					let res = chan_entry.get_mut().shutdown(&*self.fee_estimator, &msg)?;
+					if chan_entry.get().is_shutdown() {
+						chan_entry.remove_entry();
+					}
+					res
+				},
+				hash_map::Entry::Vacant(_) => return Err(HandleError{err: "Failed to find corresponding channel", msg: None})
+			}
+		};
+		for payment_hash in res.2 {
+			// unknown_next_peer...I dunno who that is anymore....
+			self.fail_htlc_backwards_internal(self.channel_state.lock().unwrap(), &payment_hash, HTLCFailReason::Reason { failure_code: 0x4000 | 10, data: &[0; 0] });
+		}
+		Ok((res.0, res.1))
 	}
 
-	fn handle_closing_signed(&self, _their_node_id: &PublicKey, _msg: &msgs::ClosingSigned) -> Result<(), HandleError> {
-		unimplemented!()
+	fn handle_closing_signed(&self, their_node_id: &PublicKey, msg: &msgs::ClosingSigned) -> Result<Option<msgs::ClosingSigned>, HandleError> {
+		let res = {
+			let mut channel_state = self.channel_state.lock().unwrap();
+			match channel_state.by_id.entry(msg.channel_id.clone()) {
+				hash_map::Entry::Occupied(mut chan_entry) => {
+					if chan_entry.get().get_their_node_id() != *their_node_id {
+						return Err(HandleError{err: "Got a message for a channel from the wrong node!", msg: None})
+					}
+					let res = chan_entry.get_mut().closing_signed(&*self.fee_estimator, &msg)?;
+					if res.1.is_some() {
+						// We're done with this channel, we've got a signed closing transaction and
+						// will send the closing_signed back to the remote peer upon return. This
+						// also implies there are no pending HTLCs left on the channel, so we can
+						// fully delete it from tracking (the channel monitor is still around to
+						// watch for old state broadcasts)!
+						chan_entry.remove_entry();
+					}
+					res
+				},
+				hash_map::Entry::Vacant(_) => return Err(HandleError{err: "Failed to find corresponding channel", msg: None})
+			}
+		};
+		if let Some(broadcast_tx) = res.1 {
+			self.tx_broadcaster.broadcast_transaction(&broadcast_tx);
+		}
+		Ok(res.0)
 	}
 
 	fn handle_update_add_htlc(&self, their_node_id: &PublicKey, msg: &msgs::UpdateAddHTLC) -> Result<(), msgs::HandleError> {
@@ -1878,45 +1925,49 @@ mod tests {
 		let feeest_1 = Arc::new(test_utils::TestFeeEstimator { sat_per_vbyte: 1 });
 		let chain_monitor_1 = Arc::new(chaininterface::ChainWatchInterfaceUtil::new());
 		let chan_monitor_1 = Arc::new(test_utils::TestChannelMonitor{});
+		let tx_broadcaster_1 = Arc::new(test_utils::TestBroadcaster{});
 		let node_id_1 = {
 			let mut key_slice = [0; 32];
 			rng.fill_bytes(&mut key_slice);
 			SecretKey::from_slice(&secp_ctx, &key_slice).unwrap()
 		};
-		let node_1 = ChannelManager::new(node_id_1.clone(), 0, true, Network::Testnet, feeest_1.clone(), chan_monitor_1.clone(), chain_monitor_1.clone()).unwrap();
+		let node_1 = ChannelManager::new(node_id_1.clone(), 0, true, Network::Testnet, feeest_1.clone(), chan_monitor_1.clone(), chain_monitor_1.clone(), tx_broadcaster_1.clone()).unwrap();
 		let router_1 = Router::new(PublicKey::from_secret_key(&secp_ctx, &node_id_1).unwrap());
 
 		let feeest_2 = Arc::new(test_utils::TestFeeEstimator { sat_per_vbyte: 1 });
 		let chain_monitor_2 = Arc::new(chaininterface::ChainWatchInterfaceUtil::new());
 		let chan_monitor_2 = Arc::new(test_utils::TestChannelMonitor{});
+		let tx_broadcaster_2 = Arc::new(test_utils::TestBroadcaster{});
 		let node_id_2 = {
 			let mut key_slice = [0; 32];
 			rng.fill_bytes(&mut key_slice);
 			SecretKey::from_slice(&secp_ctx, &key_slice).unwrap()
 		};
-		let node_2 = ChannelManager::new(node_id_2.clone(), 0, true, Network::Testnet, feeest_2.clone(), chan_monitor_2.clone(), chain_monitor_2.clone()).unwrap();
+		let node_2 = ChannelManager::new(node_id_2.clone(), 0, true, Network::Testnet, feeest_2.clone(), chan_monitor_2.clone(), chain_monitor_2.clone(), tx_broadcaster_2.clone()).unwrap();
 		let router_2 = Router::new(PublicKey::from_secret_key(&secp_ctx, &node_id_2).unwrap());
 
 		let feeest_3 = Arc::new(test_utils::TestFeeEstimator { sat_per_vbyte: 1 });
 		let chain_monitor_3 = Arc::new(chaininterface::ChainWatchInterfaceUtil::new());
 		let chan_monitor_3 = Arc::new(test_utils::TestChannelMonitor{});
+		let tx_broadcaster_3 = Arc::new(test_utils::TestBroadcaster{});
 		let node_id_3 = {
 			let mut key_slice = [0; 32];
 			rng.fill_bytes(&mut key_slice);
 			SecretKey::from_slice(&secp_ctx, &key_slice).unwrap()
 		};
-		let node_3 = ChannelManager::new(node_id_3.clone(), 0, true, Network::Testnet, feeest_3.clone(), chan_monitor_3.clone(), chain_monitor_3.clone()).unwrap();
+		let node_3 = ChannelManager::new(node_id_3.clone(), 0, true, Network::Testnet, feeest_3.clone(), chan_monitor_3.clone(), chain_monitor_3.clone(), tx_broadcaster_3.clone()).unwrap();
 		let router_3 = Router::new(PublicKey::from_secret_key(&secp_ctx, &node_id_3).unwrap());
 
 		let feeest_4 = Arc::new(test_utils::TestFeeEstimator { sat_per_vbyte: 1 });
 		let chain_monitor_4 = Arc::new(chaininterface::ChainWatchInterfaceUtil::new());
 		let chan_monitor_4 = Arc::new(test_utils::TestChannelMonitor{});
+		let tx_broadcaster_4 = Arc::new(test_utils::TestBroadcaster{});
 		let node_id_4 = {
 			let mut key_slice = [0; 32];
 			rng.fill_bytes(&mut key_slice);
 			SecretKey::from_slice(&secp_ctx, &key_slice).unwrap()
 		};
-		let node_4 = ChannelManager::new(node_id_4.clone(), 0, true, Network::Testnet, feeest_4.clone(), chan_monitor_4.clone(), chain_monitor_4.clone()).unwrap();
+		let node_4 = ChannelManager::new(node_id_4.clone(), 0, true, Network::Testnet, feeest_4.clone(), chan_monitor_4.clone(), chain_monitor_4.clone(), tx_broadcaster_4.clone()).unwrap();
 		let router_4 = Router::new(PublicKey::from_secret_key(&secp_ctx, &node_id_4).unwrap());
 
 		// Create some initial channels
diff --git a/src/ln/msgs.rs b/src/ln/msgs.rs
index 6bb90096..c7310ac9 100644
--- a/src/ln/msgs.rs
+++ b/src/ln/msgs.rs
@@ -366,8 +366,8 @@ pub trait ChannelMessageHandler : events::EventsProvider {
 	fn handle_funding_locked(&self, their_node_id: &PublicKey, msg: &FundingLocked) -> Result<Option<AnnouncementSignatures>, HandleError>;
 
 	// Channl close:
-	fn handle_shutdown(&self, their_node_id: &PublicKey, msg: &Shutdown) -> Result<(), HandleError>;
-	fn handle_closing_signed(&self, their_node_id: &PublicKey, msg: &ClosingSigned) -> Result<(), HandleError>;
+	fn handle_shutdown(&self, their_node_id: &PublicKey, msg: &Shutdown) -> Result<(Option<Shutdown>, Option<ClosingSigned>), HandleError>;
+	fn handle_closing_signed(&self, their_node_id: &PublicKey, msg: &ClosingSigned) -> Result<Option<ClosingSigned>, HandleError>;
 
 	// HTLC handling:
 	fn handle_update_add_htlc(&self, their_node_id: &PublicKey, msg: &UpdateAddHTLC) -> Result<(), HandleError>;
diff --git a/src/ln/peer_handler.rs b/src/ln/peer_handler.rs
index 9715ee96..3eb3ebf2 100644
--- a/src/ln/peer_handler.rs
+++ b/src/ln/peer_handler.rs
@@ -357,11 +357,20 @@ impl<Descriptor: SocketDescriptor> PeerManager<Descriptor> {
 
 											38 => {
 												let msg = try_potential_decodeerror!(msgs::Shutdown::decode(&msg_data[2..]));
-												try_potential_handleerror!(self.message_handler.chan_handler.handle_shutdown(&peer.their_node_id.unwrap(), &msg));
+												let resp_options = try_potential_handleerror!(self.message_handler.chan_handler.handle_shutdown(&peer.their_node_id.unwrap(), &msg));
+												if let Some(resp) = resp_options.0 {
+													encode_and_send_msg!(resp, 38);
+												}
+												if let Some(resp) = resp_options.1 {
+													encode_and_send_msg!(resp, 39);
+												}
 											},
 											39 => {
 												let msg = try_potential_decodeerror!(msgs::ClosingSigned::decode(&msg_data[2..]));
-												try_potential_handleerror!(self.message_handler.chan_handler.handle_closing_signed(&peer.their_node_id.unwrap(), &msg));
+												let resp_option = try_potential_handleerror!(self.message_handler.chan_handler.handle_closing_signed(&peer.their_node_id.unwrap(), &msg));
+												if let Some(resp) = resp_option {
+													encode_and_send_msg!(resp, 39);
+												}
 											},
 
 											128 => {
diff --git a/src/util/test_utils.rs b/src/util/test_utils.rs
index df13e1c9..00f944d0 100644
--- a/src/util/test_utils.rs
+++ b/src/util/test_utils.rs
@@ -3,6 +3,7 @@ use chain::chaininterface::ConfirmationTarget;
 use ln::channelmonitor;
 use ln::msgs::HandleError;
 
+use bitcoin::blockdata::transaction::Transaction;
 use bitcoin::util::hash::Sha256dHash;
 
 pub struct TestFeeEstimator {
@@ -23,3 +24,12 @@ impl channelmonitor::ManyChannelMonitor for TestChannelMonitor {
 		Ok(())
 	}
 }
+
+pub struct TestBroadcaster {
+
+}
+impl chaininterface::BroadcasterInterface for TestBroadcaster {
+	fn broadcast_transaction(&self, _tx: &Transaction) {
+		//TODO
+	}
+}
-- 
2.30.2