Enabling Privacy-Preserving Off-chain Payment via Hybrid Multi-hop Mechanism

Abstract

The adoption of cryptocurrency based on blockchain technology has grown to an unprecedented level. As an off-chain scaling fashion, payment channel network (PCN) is used to fulfill cryptocurrency transfer conveniently for different users. However, current PCNs cannot guarantee the identity privacy of nodes on channels partly due to various off-chain channel-based threats by wormhole attack. This paper proposes a hybrid multi-hop mechanism, including PCN, onion routing and sidechain to ensure the privacy-preserving off-chain payment. First, we overlay the onion routing on PCN to realize identity anonymity of each node. Then we divide the payment fund into two parts: the transfer amount and fees for intermediate nodes. We apply sidechain to lock the intermediate fees by smart contract to prevent the intermediate fees from being stolen by malicious nodes using wormhole attack. Security analysis and performance evaluation show that our mechanism can effectively improve the identity privacy and transaction security of off-chain payments by reducing computational latency.