Extras and Premiums: Local PCN Routing with Redundancy and Fees

Yu Shen*, Oğuzhan Ersoy, Stefanie Roos

*Corresponding author for this work

Research output: Chapter in Book/Conference proceedings/Edited volumeConference contributionScientificpeer-review

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Abstract

Payment channel networks (PCNs) are a promising solution to the blockchain scalability problem. In PCNs, a sender can route a multi-hop payment to a receiver via intermediaries. Yet, Lightning, the only prominent payment channel network, has two major issues when it comes to multi-hop payments. First, the sender decides on the path without being able to take local capacity restrictions into account. Second, due to the atomicity of payments, any failure in the path causes a failure of the complete payment. In this work, we propose Forward-Update-Finalize (FUFi): The sender adds redundancy to a locally routed payment by initially committing to sending a higher amount than the actual payment value. Intermediaries decide on how to forward a received payment, potentially splitting it between multiple paths. If they cannot forward the total payment value, they may reduce the amount they forward. If paths for sufficient funds are found, the receiver and sender jointly select the paths and amounts that will actually be paid. Payment commitments are updated accordingly and fulfilled. In order to guarantee atomicity and correctness of the payment value, we use a modified Hashed Time Lock Contract (HTLC) for paying that requires both the sender and the receiver to provide a secret preimage. FUFi furthermore is the first local routing protocol to include fees and specify a fee policy to intermediaries on how to determine their fair share of fees. We prove that the proposed protocol achieves all key security properties of multi-hop payments. Furthermore, our evaluation on both synthetic and real-world Lightning topologies shows FUFi outperforms existing algorithms in terms of fraction of successful payments by about 10%.

Original languageEnglish
Title of host publicationFinancial Cryptography and Data Security - 27th International Conference, FC 2023, Revised Selected Papers
EditorsFoteini Baldimtsi, Christian Cachin
PublisherSpringer
Pages110-127
Number of pages18
ISBN (Print)9783031477508
DOIs
Publication statusPublished - 2024
Event27th International Conference on Financial Cryptography and Data Security, FC 2023 - Bol, Croatia
Duration: 1 May 20235 May 2023

Publication series

NameLecture Notes in Computer Science (including subseries Lecture Notes in Artificial Intelligence and Lecture Notes in Bioinformatics)
Volume13951
ISSN (Print)0302-9743
ISSN (Electronic)1611-3349

Conference

Conference27th International Conference on Financial Cryptography and Data Security, FC 2023
Country/TerritoryCroatia
CityBol
Period1/05/235/05/23

Bibliographical note

Green Open Access added to TU Delft Institutional Repository ‘You share, we take care!’ – Taverne project https://www.openaccess.nl/en/you-share-we-take-care
Otherwise as indicated in the copyright section: the publisher is the copyright holder of this work and the author uses the Dutch legislation to make this work public.

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