Use counterparty connection hops when verifying channel state

modules/core/04-channel/keeper/upgrade.go

@@ -355,11 +355,19 @@ func (k Keeper) ChanUpgradeOpen(
 		if !found {
 			return errorsmod.Wrapf(types.ErrUpgradeNotFound, "failed to retrieve channel upgrade: port ID (%s) channel ID (%s)", portID, channelID)
 		}
+		// If counterparty has reached OPEN, we must use the upgraded connection to verify the counterparty channel
+		upgradedConnection, err := k.GetConnection(ctx, upgrade.Fields.ConnectionHops[0])
+		if err != nil {
+			return errorsmod.Wrap(err, "failed to retrieve connection using the upgrade connection hops")
+		}
+		if upgradedConnection.GetState() != int32(connectiontypes.OPEN) {
+			return errorsmod.Wrapf(connectiontypes.ErrInvalidConnectionState, "connection state is not OPEN (got %s)", connectiontypes.State(upgradedConnection.GetState()).String())
+		}
 
 		counterpartyChannel = types.Channel{
 			State:           types.OPEN,
 			Ordering:        upgrade.Fields.Ordering,
-			ConnectionHops:  upgrade.Fields.ConnectionHops,
+			ConnectionHops:  []string{upgradedConnection.GetCounterparty().GetConnectionID()},
 			Counterparty:    types.NewCounterparty(portID, channelID),
 			Version:         upgrade.Fields.Version,
 			UpgradeSequence: channel.UpgradeSequence,

modules/core/04-channel/keeper/upgrade_test.go

@@ -754,6 +754,91 @@ func (suite *KeeperTestSuite) TestChanUpgradeOpen() {
 	}
 }
 
+// TestChanUpgradeOpenCounterPartyStates tests the handshake in the cases where
+// the counterparty is in a state other than OPEN.
+func (suite *KeeperTestSuite) TestChanUpgradeOpenCounterPartyStates() {
+	var path *ibctesting.Path
+	testCases := []struct {
+		name     string
+		malleate func()
+		expError error
+	}{
+		{
+			"success, counterparty in OPEN",
+			func() {
+				err := path.EndpointB.ChanUpgradeInit()
+				suite.Require().NoError(err)
+
+				err = path.EndpointA.ChanUpgradeTry()
+				suite.Require().NoError(err)
+
+				err = path.EndpointB.ChanUpgradeAck()
+				suite.Require().NoError(err)
+
+				// TODO: Remove when #4030 is closed. Channel will automatically
+				// move to OPEN in that case.
+				err = path.EndpointB.ChanUpgradeOpen()
+				suite.Require().NoError(err)
+
+				suite.coordinator.CommitBlock(suite.chainA, suite.chainB)
+				suite.Require().NoError(path.EndpointA.UpdateClient())
+			},
+			nil,
+		},
+		{
+			"success, counterparty in TRYUPGRADE",
+			func() {
+				err := path.EndpointA.ChanUpgradeInit()
+				suite.Require().NoError(err)
+
+				err = path.EndpointB.ChanUpgradeTry()
+				suite.Require().NoError(err)
+
+				err = path.EndpointA.ChanUpgradeAck()
+				suite.Require().NoError(err)
+			},
+			nil,
+		},
+	}
+
+	// Create an initial path used only to invoke a ChanOpenInit handshake.
+	// This bumps the channel identifier generated for chain A on the
+	// next path used to run the upgrade handshake.
+	// See issue 4062.
+	path = ibctesting.NewPath(suite.chainA, suite.chainB)
+	suite.coordinator.SetupClients(path)
+	suite.Require().NoError(path.EndpointA.ConnOpenInit())
+	suite.coordinator.SetupConnections(path)
+	suite.Require().NoError(path.EndpointA.ChanOpenInit())
+
+	for _, tc := range testCases {
+		tc := tc
+		suite.Run(tc.name, func() {
+			suite.SetupTest()
+
+			path = ibctesting.NewPath(suite.chainA, suite.chainB)
+			suite.coordinator.Setup(path)
+
+			path.EndpointB.ChannelConfig.ProposedUpgrade.Fields.Version = mock.UpgradeVersion
+			path.EndpointA.ChannelConfig.ProposedUpgrade.Fields.Version = mock.UpgradeVersion
+
+			tc.malleate()
+
+			proofCounterpartyChannel, _, proofHeight := path.EndpointA.QueryChannelUpgradeProof()
+			err := suite.chainA.GetSimApp().IBCKeeper.ChannelKeeper.ChanUpgradeOpen(
+				suite.chainA.GetContext(), path.EndpointA.ChannelConfig.PortID, path.EndpointA.ChannelID,
+				path.EndpointB.GetChannel().State, proofCounterpartyChannel, proofHeight,
+			)
+
+			if tc.expError == nil {
+				suite.Require().NoError(err)
+			} else {
+				suite.Require().ErrorIs(err, tc.expError)
+			}
+		})
+	}
+}
+
 func (suite *KeeperTestSuite) TestChanUpgradeTimeout() {
 	var (
 		path                     *ibctesting.Path