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Bitcoin, Ethereum and other blockchain-based cryptocurrencies, as deployed today, cannot support more than several transactions per second. Off-chain payment channels, a “layer 2” solution, are a leading approach for cryptocurrency scaling. They enable two mutually distrustful parties to rapidly send payments between each other and can be linked together to form a payment network, such that payments between any two parties can be routed through the network along a path that connects them. We propose a novel payment channel protocol, called Sprites. The main advantage of Sprites compared with earlier protocols is a reduced “collateral cost,” meaning the amount of money × time that must be locked up before disputes are settled. In the Lightning Network and Raiden, a payment across a path of ` channels requires locking up collateral for Θ(`∆) time, where ∆ is the time to commit an on-chain transaction; every additional node on the path forces an increase in lock time. The Sprites construction provides a constant lock time, reducing the overall collateral cost to Θ(` + ∆). Our presentation of the Sprites protocol is also modular, making use of a generic state channel abstraction. Finally, Sprites improves on prior payment channel constructions by supporting partial withdrawals and deposits without any on-chain transactions.
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This content will become publicly available on January 1, 2026
Pricing for Routing and Flow-Control in Payment Channel Networks
A payment channel network is a blockchain-based overlay mechanism that allows parties to transact more efficiently than directly using the blockchain. These networks are composed of payment channels that carry transactions between pairs of users. Due to its design, a payment channel cannot sustain a net flow of money in either direction indefinitely. Therefore, a payment channel network cannot serve transaction requests arbitrarily over a long period of time. We introduce DEBT control, a joint routing and flow-control protocol that guides a payment channel network towards an optimal operating state for any steady-state demand. In this protocol, each channel sets a price for routing transactions through it. Transacting users make flow-control and routing decisions by responding to these prices. A channel updates its price based on the net flow of money through it. We develop the protocol by formulating a network utility maximization problem and solving its dual through gradient descent. We provide convergence guarantees for the protocol and also illustrate its behavior through simulations.
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- Award ID(s):
- 1900636
- PAR ID:
- 10632180
- Publisher / Repository:
- Institute for Electrical and Electronic Engineers
- Date Published:
- Journal Name:
- IEEE Transactions on Networking
- ISSN:
- 2998-4157
- Page Range / eLocation ID:
- 1 to 16
- Subject(s) / Keyword(s):
- Payment channel networks routing flow control network protocols dual method
- Format(s):
- Medium: X
- Sponsoring Org:
- National Science Foundation
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