Abstract
Traditional centralized token exchange (CEX) has been suffering from hacking due to the centralized management of users’ tokens. In contrast, decentralized token exchange (DEX) maintains users’ assets by smart contracts in a decentralized manner, but introduces additional overhead in terms of gas fee and transaction confirmation latency. Hybrid decentralized token exchange (HEX) has been proposed to combine the benefits of CEX and DEX. However, existing HEX is criticized for two issues. First, trading transactions are time-consuming and expensive for frequent token traders. Second, excessive simultaneous transactions might cause the pending transaction congestion in the Ethereum network. In this paper, we propose a payment channel based HEX, which extends existing solutions by adding a new payment channel layer to benefit frequent traders and alleviate the pending transaction congestion. Besides, we propose the very first gas-price vs. transaction-confirmation-latency function to guide Ethereum transaction issuers to choose an optimal gas price that minimizes the overall cost. Extensive simulations are conducted to compare the cost in the proposed HEX with that in the conventional HEX. The results demonstrate the effectiveness of our proposed mechanism in terms of reducing gas fees and transaction confirmation latency for frequent traders as well as the pending transaction congestion in Ethereum.
Highlights
1.1 Introduction of Ethereum Token ExchangeA blockchain [1] is a continuously growing list of linked blocks shared by all nodes across a peer-to-peer network, where each block typically contains a cryptographic hash of the previous block, a timestamp and transaction data
We aim to reduce the cost in terms of monetary and waiting time for frequent traders as well as the potential transaction congestion in Ethereum by adding a new payment channel layer in hybrid decentralized token exchange (HEX)
We quantitatively evaluate the performance of payment channel in HEX by comparing the cost for users in the conventional HEX and the proposed HEX when the overall cost is minimized
Summary
1.1 Introduction of Ethereum Token ExchangeA blockchain [1] is a continuously growing list of linked blocks shared by all nodes across a peer-to-peer network, where each block typically contains a cryptographic hash of the previous block, a timestamp and transaction data. When new transactions are submitted to a blockchain, these transactions will be broadcast to all nodes in the peer-to-peer network Those nodes called miners collect new transactions and work on generating a new block which meets the rules of the consensus algorithm of the blockchain based on the collected transactions. We quantitatively evaluate the performance of payment channel in HEX by comparing the cost (i.e., gas fee and transaction confirmation latency) for users in the conventional HEX and the proposed HEX when the overall cost is minimized.
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