Fix Optimistic Channel Handshake bugs

x/ibc/core/04-channel/keeper/handshake.go

@@ -187,16 +187,33 @@ func (k Keeper) ChanOpenTry(
 		return nil, err
 	}
 
-	k.SetChannel(ctx, portID, desiredChannelID, channel)
+	var (
+		capKey *capabilitytypes.Capability
+		err    error
+	)
 
-	capKey, err := k.scopedKeeper.NewCapability(ctx, host.ChannelCapabilityPath(portID, desiredChannelID))
-	if err != nil {
-		return nil, sdkerrors.Wrapf(err, "could not create channel capability for port ID %s and channel ID %s", portID, desiredChannelID)
+	// Only create a capability and set the sequences if the previous channel does not exist
+	_, found = k.GetChannel(ctx, portID, desiredChannelID)
+	if !found {
+		capKey, err = k.scopedKeeper.NewCapability(ctx, host.ChannelCapabilityPath(portID, desiredChannelID))
+		if err != nil {
+			return nil, sdkerrors.Wrapf(err, "could not create channel capability for port ID %s and channel ID %s", portID, desiredChannelID)
+		}
+
+		k.SetNextSequenceSend(ctx, portID, desiredChannelID, 1)
+		k.SetNextSequenceRecv(ctx, portID, desiredChannelID, 1)
+		k.SetNextSequenceAck(ctx, portID, desiredChannelID, 1)
+	} else {
+		// capability initialized in ChanOpenInit
+		capKey, found = k.scopedKeeper.GetCapability(ctx, host.ChannelCapabilityPath(portID, desiredChannelID))
+		if !found {
+			return nil, sdkerrors.Wrapf(types.ErrChannelCapabilityNotFound,
+				"capability not found for existing channel, portID (%s) channelID (%s)", portID, desiredChannelID,
+			)
+		}
 	}
 
-	k.SetNextSequenceSend(ctx, portID, desiredChannelID, 1)
-	k.SetNextSequenceRecv(ctx, portID, desiredChannelID, 1)
-	k.SetNextSequenceAck(ctx, portID, desiredChannelID, 1)
+	k.SetChannel(ctx, portID, desiredChannelID, channel)
 
 	k.Logger(ctx).Info("channel state updated", "port-id", portID, "channel-id", desiredChannelID, "previous-state", previousChannel.State.String(), "new-state", "TRYOPEN")
 

x/ibc/core/04-channel/keeper/handshake_test.go

@@ -153,6 +153,12 @@ func (suite *KeeperTestSuite) TestChanOpenTry() {
 			suite.chainB.CreatePortCapability(connB.NextTestChannel(ibctesting.MockPort).PortID)
 			portCap = suite.chainB.GetPortCapability(connB.NextTestChannel(ibctesting.MockPort).PortID)
 		}, true},
+		{"success with crossing hello", func() {
+			_, _, connA, connB = suite.coordinator.SetupClientConnections(suite.chainA, suite.chainB, ibctesting.Tendermint)
+			suite.coordinator.ChanOpenInitOnBothChains(suite.chainA, suite.chainB, connA, connB, ibctesting.MockPort, ibctesting.MockPort, types.ORDERED)
+
+			portCap = suite.chainB.GetPortCapability(connB.NextTestChannel(ibctesting.MockPort).PortID)
+		}, true},
 		{"success with empty counterparty chosen channel id", func() {
 			var clientA, clientB string
 			clientA, clientB, connA, connB = suite.coordinator.SetupClientConnections(suite.chainA, suite.chainB, ibctesting.Tendermint)

x/ibc/testing/coordinator.go

@@ -524,6 +524,54 @@ func (coord *Coordinator) ChanOpenInit(
 	return sourceChannel, counterpartyChannel, nil
 }
 
+// ChanOpenInitOnBothChains initializes a channel on the source chain and counterparty chain
+// with the state INIT using the OpenInit handshake call.
+func (coord *Coordinator) ChanOpenInitOnBothChains(
+	source, counterparty *TestChain,
+	connection, counterpartyConnection *TestConnection,
+	sourcePortID, counterpartyPortID string,
+	order channeltypes.Order,
+) (TestChannel, TestChannel, error) {
+	sourceChannel := connection.AddTestChannel(sourcePortID)
+	counterpartyChannel := counterpartyConnection.AddTestChannel(counterpartyPortID)
+
+	// NOTE: only creation of a capability for a transfer or mock port is supported
+	// Other applications must bind to the port in InitGenesis or modify this code.
+	source.CreatePortCapability(sourceChannel.PortID)
+	counterparty.CreatePortCapability(counterpartyChannel.PortID)
+	coord.IncrementTime()
+
+	// initialize channel on source
+	if err := source.ChanOpenInit(sourceChannel, counterpartyChannel, order, connection.ID); err != nil {
+		return sourceChannel, counterpartyChannel, err
+	}
+	coord.IncrementTime()
+
+	// initialize channel on counterparty
+	if err := counterparty.ChanOpenInit(counterpartyChannel, sourceChannel, order, counterpartyConnection.ID); err != nil {
+		return sourceChannel, counterpartyChannel, err
+	}
+	coord.IncrementTime()
+
+	// update counterparty client on source connection
+	if err := coord.UpdateClient(
+		source, counterparty,
+		connection.ClientID, Tendermint,
+	); err != nil {
+		return sourceChannel, counterpartyChannel, err
+	}
+
+	// update source client on counterparty connection
+	if err := coord.UpdateClient(
+		counterparty, source,
+		counterpartyConnection.ClientID, Tendermint,
+	); err != nil {
+		return sourceChannel, counterpartyChannel, err
+	}
+
+	return sourceChannel, counterpartyChannel, nil
+}
+
 // ChanOpenTry initializes a channel on the source chain with the state TRYOPEN
 // using the OpenTry handshake call.
 func (coord *Coordinator) ChanOpenTry(