Abstract
The increasing use of cryptocurrencies has raised scalability and performance issues in blockchain systems that require global consensus and security assurance for real-time payments. The payment channel network (PCN) is a promising off-chain solution for cryptocurrencies; in these networks, transactions are offloaded from the blockchain and are handled directly using a payment channel with minimum involvement of the blockchain. Routing protocols for PCNs are critical for finding a path-based transaction (PBT) path with low latency and high throughput, and several routing protocols have been proposed to address decentralization, concurrency, and privacy issues. However, incentive mechanisms for the payment service provider (PSP), which are critical for successful path-based transactions, have not been sufficiently studied. Previous routing protocols are proposed only to find a best path in the given budget. In this study, we propose the payGo routing protocol, which not only discovers a feasible path but also derives the optimal incentive for the PSP using contract theory. Furthermore, payGo induces the PSP to make a contract with a counterparty to guarantee payment latency and throughput with a penalty. We implement the payGo protocol by extending the Raiden network and evaluate its performance on a testbed. The results indicate that, in comparison with the conventional linear pricing for latency, payGo can improve about 90% of payer's utility by optimizing latency and incentive.
Highlights
The recent success of cryptocurrencies, such as Bitcoin [1], Ethereum [2], Ripple [3], and Stellar [4], has given rise to a new financial ecosystem with real-time gross settlement of transactions
For an exponentially increasing transaction volume, an ‘‘off-chain’’ technique that allows rapid direct payments between two nodes without accessing the blockchain, has emerged as a promising approach to scale up the blockchain network and increase the number of transactions per second (TPS)
Bi-directional payment channels [9], [10] between two nodes constitute a network for path-based transactions (PBT), which is called a payment-channel network (PCN)
Summary
The recent success of cryptocurrencies, such as Bitcoin [1], Ethereum [2], Ripple [3], and Stellar [4], has given rise to a new financial ecosystem with real-time gross settlement of transactions. The blockchain is involved only when a bi-directional payment channel is established or closed for deposit or withdrawal This off-chain network can improve the scalability and efficiency of the. Bi-directional payment channels [9], [10] between two nodes constitute a network for path-based transactions (PBT), which is called a payment-channel network (PCN). CheaPay [23] minimized the transaction fee of a payment path subject to feasibility and timeliness constraints, as in the example. These constraints, which are probed during a routing procedure, could be invalid when an actual transaction occurs owing to collateral fluctuation in the channels.
Sign-in/Register to view highlights & summary 
Published Version (
Free)
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call