From cfbf74161b94742b84fd18130d2b86e5114d805d Mon Sep 17 00:00:00 2001
From: Slyghtning <hieblmi@protonmail.com>
Date: Tue, 11 Aug 2026 11:38:27 +0200
Subject: [PATCH] instantout: recheck reservation timing during recovery

Compare reservation expiry with the current height during recovery and
use the HTLC path when the remaining window is too short.
---
 instantout/actions.go         | 26 ++++++++++++++++++++++++++
 instantout/instantout_test.go | 26 ++++++++++++++++++++++++++
 instantout/manager.go         |  5 ++++-
 3 files changed, 56 insertions(+), 1 deletion(-)

diff --git a/instantout/actions.go b/instantout/actions.go
index 8a1ca3f0..d1ba889f 100644
--- a/instantout/actions.go
+++ b/instantout/actions.go
@@ -63,6 +63,12 @@ type InitInstantOutCtx struct {
 	sweepAddress    btcutil.Address
 }
 
+// RecoverInstantOutCtx contains the chain height at which an instant out is
+// resumed after restart.
+type RecoverInstantOutCtx struct {
+	currentHeight int32
+}
+
 // InitInstantOutAction is the first action that is executed when the instant
 // out FSM is started. It will send the instant out request to the server.
 func (f *FSM) InitInstantOutAction(ctx context.Context,
@@ -382,6 +388,26 @@ func (f *FSM) BuildHTLCAction(ctx context.Context,
 func (f *FSM) PushPreimageAction(ctx context.Context,
 	eventCtx fsm.EventContext) fsm.EventType {
 
+	// A recovered swap may have been offline long enough that the server's
+	// reservation timeout is now close. Fall back to the already finalized
+	// HTLC instead of revealing the preimage without enough time to publish
+	// that safety transaction.
+	if recoverCtx, ok := eventCtx.(*RecoverInstantOutCtx); ok {
+		minReservationExpiry := int64(recoverCtx.currentHeight) +
+			int64(htlcExpiryDelta)
+		for _, res := range f.InstantOut.Reservations {
+			if int64(res.Expiry) >= minReservationExpiry {
+				continue
+			}
+
+			f.LastActionError = fmt.Errorf("reservation %x expires at "+
+				"height %d, before recovery safety height %d",
+				res.ID, res.Expiry, minReservationExpiry)
+
+			return OnErrorPublishHtlc
+		}
+	}
+
 	// First we'll create the musig2 context.
 	coopSessions, coopClientNonces, err := f.InstantOut.createMusig2Session(
 		ctx, f.cfg.Signer,
diff --git a/instantout/instantout_test.go b/instantout/instantout_test.go
index fd45b788..f95218bd 100644
--- a/instantout/instantout_test.go
+++ b/instantout/instantout_test.go
@@ -8,6 +8,7 @@ import (
 	"github.com/btcsuite/btcd/btcutil"
 	"github.com/btcsuite/btcd/wire"
 	"github.com/lightninglabs/lndclient"
+	"github.com/lightninglabs/loop/fsm"
 	"github.com/lightninglabs/loop/instantout/reservation"
 	"github.com/lightningnetwork/lnd/input"
 	"github.com/stretchr/testify/require"
@@ -113,3 +114,28 @@ func TestCleanupMuSig2Sessions(t *testing.T) {
 	require.NoError(t, err)
 	require.Equal(t, [][32]byte{firstID, secondID}, signer.cleaned)
 }
+
+// TestPushPreimageRejectsExpiringReservation verifies that recovery takes the
+// on-chain fallback before revealing the preimage when a reservation is too
+// close to its server-controlled timeout.
+func TestPushPreimageRejectsExpiringReservation(t *testing.T) {
+	instantOutFSM := &FSM{
+		StateMachine: &fsm.StateMachine{},
+		InstantOut: &InstantOut{
+			Reservations: []*reservation.Reservation{
+				{
+					ID:     reservation.ID{1},
+					Expiry: 139,
+				},
+			},
+		},
+	}
+
+	event := instantOutFSM.PushPreimageAction(
+		t.Context(), &RecoverInstantOutCtx{currentHeight: 100},
+	)
+	require.Equal(t, OnErrorPublishHtlc, event)
+	require.ErrorContains(
+		t, instantOutFSM.LastActionError, "before recovery safety height",
+	)
+}
diff --git a/instantout/manager.go b/instantout/manager.go
index 37ccb681..9413f5bb 100644
--- a/instantout/manager.go
+++ b/instantout/manager.go
@@ -119,8 +119,11 @@ func (m *Manager) recoverInstantOuts(ctx context.Context) error {
 
 		// As SendEvent can block, we'll start a goroutine to process
 		// the event.
+		recoverCtx := &RecoverInstantOutCtx{
+			currentHeight: m.currentHeight,
+		}
 		go func() {
-			err := instantOutFSM.SendEvent(ctx, OnRecover, nil)
+			err := instantOutFSM.SendEvent(ctx, OnRecover, recoverCtx)
 			if err != nil {
 				log.Errorf("FSM %v Error sending recover "+
 					"event %v, state: %v",