Document Open Access Logo

Musketeer: Incentive-Compatible Rebalancing for Payment Channel Networks

Authors Zeta Avarikioti , Stefan Schmid , Samarth Tiwari

PDF
Thumbnail PDF

File

LIPIcs.AFT.2024.13.pdf
  • Filesize: 1 MB
  • 22 pages

Document Identifiers

Author Details

Zeta Avarikioti
  • TU Wien, Vienna, Austria
  • Common Prefix, Vienna, Austria
Stefan Schmid
  • TU Berlin, Germany
  • Fraunhofer SIT, Berlin, Germany
  • Weizenbaum Institute, Berlin, Germany
Samarth Tiwari
  • Centrum Wiskunde & Informatica, Amsterdam, The Netherlands

Funding

This work was partially funded by the German Research Foundation (DFG) Schwerpunktprogramm (SPP 2378, ReNO) 2023-2027, by the Austrian Science Fund (FWF) through the SFB SpyCode project F8512-N, the project CoRaF (grant agreement ESP 68-N), and by the WWTF through the project 10.47379/ICT22045.

Cite AsGet BibTex

Zeta Avarikioti, Stefan Schmid, and Samarth Tiwari. Musketeer: Incentive-Compatible Rebalancing for Payment Channel Networks. In 6th Conference on Advances in Financial Technologies (AFT 2024). Leibniz International Proceedings in Informatics (LIPIcs), Volume 316, pp. 13:1-13:22, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2024)
https://doi.org/10.4230/LIPIcs.AFT.2024.13

Abstract

In this work, we revisit the severely limited throughput problem of cryptocurrencies and propose a novel rebalancing approach for Payment Channel Networks (PCNs). PCNs are a popular solution for increasing the blockchain throughput, however, their benefit depends on the overall users' liquidity. Rebalancing mechanisms are the state-of-the-art approach to maintaining high liquidity in PCNs. However, existing opt-in rebalancing mechanisms exclude users that may assist in rebalancing for small service fees, leading to suboptimal solutions and under-utilization of the PCNs' bounded liquidity. We introduce the first rebalancing approach for PCNs that includes all users, following a "all for one and one for all" design philosophy that yields optimal throughput. The proposed approach introduces a double-auction rebalancing problem, which we term Musketeer, where users can participate as buyers (paying fees to rebalance) or sellers (charging fees to route transactions). The desired properties tailored to the unique characteristics of PCNs are formally defined, including the novel game-theoretic property of cyclic budget balance that is a stronger variation of strong budget balance. Basic results derived from auction theory, including an impossibility and multiple mechanisms that either achieve all desiderata under a relaxed model or sacrifice one of the properties, are presented. We also propose a novel mechanism that leverages time delays as an additional cost to users. This mechanism is provably truthful, cyclic budget balanced, individually rational and economic efficient but only with respect to liquidity.

Subject Classification

ACM Subject Classification
  • Computing methodologies → Distributed algorithms
  • Theory of computation → Distributed algorithms
  • Theory of computation → Algorithmic mechanism design
Keywords
  • Blockchains
  • Payment Channel Networks
  • Rebalancing
  • Game Theory

Metrics

  • Access Statistics
  • Total Accesses (updated on a weekly basis)
    0
    PDF Downloads
    0
    Metadata Views

References

  1. Rebalance plugin. URL: https://github.com/lightningd/plugins/tree/master/rebalance.
  2. R. Ahuja, T. Magnanti, and J. Orlin. Network flows - theory, algorithms and applications. Prentice Hall, 1993. Google Scholar
  3. Lukas Aumayr, Kasra Abbaszadeh, and Matteo Maffei. Thora: Atomic and privacy-preserving multi-channel updates. IACR Cryptol. ePrint Arch., page 317, 2022. URL: https://eprint.iacr.org/2022/317.
  4. Lukas Aumayr, Pedro Moreno-Sanchez, Aniket Kate, and Matteo Maffei. Blitz: Secure Multi-Hop payments without Two-Phase commits. In 30th USENIX Security Symposium (USENIX Security 21), pages 4043-4060. USENIX Association, August 2021. URL: https://www.usenix.org/conference/usenixsecurity21/presentation/aumayr.
  5. Georgia Avarikioti, Gerrit Janssen, Yuyi Wang, and Roger Wattenhofer. Payment network design with fees. In Data Privacy Management, Cryptocurrencies and Blockchain Technology, pages 76-84. Springer, 2018. Google Scholar
  6. Georgia Avarikioti, Yuyi Wang, and Roger Wattenhofer. Algorithmic channel design. In 29th International Symposium on Algorithms and Computation, Jiaoxi, Yilan County, Taiwan, 2018. Google Scholar
  7. Zeta Avarikioti, Lioba Heimbach, Yuyi Wang, and Roger Wattenhofer. Ride the lightning: The game theory of payment channels. In International Conference on Financial Cryptography and Data Security, 2020. Google Scholar
  8. Zeta Avarikioti, Eleftherios Kokoris Kogias, Roger Wattenhofer, and Dionysis Zindros. Brick: Asynchronous incentive-compatible payment channels. In International Conference on Financial Cryptography and Data Security, 2021. Google Scholar
  9. Zeta Avarikioti, Orfeas Stefanos Thyfronitis Litos, and Roger Wattenhofer. Cerberus channels: Incentivizing watchtowers for bitcoin. In International Conference on Financial Cryptography and Data Security, pages 346-366. Springer, 2020. Google Scholar
  10. Zeta Avarikioti, Krzysztof Pietrzak, Iosif Salem, Stefan Schmid, Samarth Tiwari, and Michelle Yeo. Hide and seek: Privacy-preserving rebalancing on payment channel networks. In Proc. Financial Cryptography and Data Security (FC), 2022. Google Scholar
  11. Yossi Azar, Edith Cohen, Amos Fiat, Haim Kaplan, and Harald Racke. Optimal oblivious routing in polynomial time. In Proceedings of the Thirty-Fifth Annual ACM Symposium on Theory of Computing, STOC '03, pages 383-388, New York, NY, USA, 2003. Association for Computing Machinery. URL: https://doi.org/10.1145/780542.780599.
  12. Moshe Babaioff, Shahar Dobzinski, Sigal Oren, and Aviv Zohar. On bitcoin and red balloons. In EC, 2012. URL: https://doi.org/10.1145/2229012.2229022.
  13. Christian Badertscher, Juan Garay, Ueli Maurer, Daniel Tschudi, and Vassilis Zikas. But why does it work? a rational protocol design treatment of bitcoin. In Eurocrypt, 2018. URL: https://doi.org/10.1007/978-3-319-78375-8_2.
  14. Burak Can, Jens Leth Hougaard, and Mohsen Pourpouneh. On reward sharing in blockchain mining pools. Games and Economic Behavior, 136:274-298, 2022. URL: https://doi.org/10.1016/j.geb.2022.10.002.
  15. Miles Carlsten, Harry Kalodner, S Matthew Weinberg, and Arvind Narayanan. On the instability of bitcoin without the block reward. In CCS, 2016. URL: https://doi.org/10.1145/2976749.2978408.
  16. Xi Chen, Christos Papadimitriou, and Tim Roughgarden. An axiomatic approach to block rewards. In AFT, 2019. URL: https://doi.org/10.1145/3318041.3355470.
  17. José R Correa, Andreas S Schulz, and Nicolás E Stier-Moses. Selfish routing in capacitated networks. Mathematics of Operations Research, 33(4):961-976, 2008. Google Scholar
  18. Kyle Croman, Christian Decker, Ittay Eyal, Adem Efe Gencer, Ari Juels, Ahmed Kosba, Andrew Miller, Prateek Saxena, Elaine Shi, Emin Gün Sirer, Dawn Song, and Roger Wattenhofer. On scaling decentralized blockchains. In International Conference on Financial Cryptography and Data Security, pages 106-125. Springer, 2016. Google Scholar
  19. Oğuzhan Ersoy, Stefanie Roos, and Zekeriya Erkin. How to profit from payments channels. In FC, 2020. URL: https://doi.org/10.1007/978-3-030-51280-4_16.
  20. Ittay Eyal. The miner’s dilemma. In IEEE S&P, 2015. URL: https://doi.org/10.1109/SP.2015.13.
  21. Ittay Eyal and Emin Gün Sirer. Majority is not enough: Bitcoin mining is vulnerable. In International conference on financial cryptography and data security, pages 436-454. Springer, 2014. Google Scholar
  22. Joan Feigenbaum, Christos H Papadimitriou, Rahul Sami, and Scott Shenker. A bgp-based mechanism for lowest-cost routing. Distributed Computing, 18(1):61-72, 2005. Google Scholar
  23. Yossi Gilad, Rotem Hemo, Silvio Micali, Georgios Vlachos, and Nickolai Zeldovich. Algorand: Scaling byzantine agreements for cryptocurrencies. In Proceedings of the 26th Symposium on Operating Systems Principles, pages 51-68. ACM, 2017. Google Scholar
  24. Lewis Gudgeon, Pedro Moreno-Sanchez, Stefanie Roos, Patrick McCorry, and Arthur Gervais. Sok: Layer-two blockchain protocols. In International Conference on Financial Cryptography and Data Security, pages 201-226. Springer, 2020. Google Scholar
  25. Abdelatif Hafid, Abdelhakim Senhaji Hafid, and Mustapha Samih. Scaling blockchains: A comprehensive survey. IEEE Access, 8:125244-125262, 2020. URL: https://doi.org/10.1109/ACCESS.2020.3007251.
  26. Rami Khalil and Arthur Gervais. Revive: Rebalancing off-blockchain payment networks. In Proceedings of the 2017 ACM SIGSAC Conference on Computer and Communications Security, pages 439-453, 2017. Google Scholar
  27. Aggelos Kiayias, Elias Koutsoupias, Maria Kyropoulou, and Yiannis Tselekounis. Blockchain mining games. In EC, 2016. URL: https://doi.org/10.1145/2940716.2940773.
  28. Y.A. Korilis, A.A. Lazar, and A. Orda. Achieving network optima using stackelberg routing strategies. IEEE/ACM Transactions on Networking, 5(1):161-173, 1997. URL: https://doi.org/10.1109/90.554730.
  29. Yujin Kwon, Dohyun Kim, Yunmok Son, Eugene Vasserman, and Yongdae Kim. Be selfish and avoid dilemmas: Fork after withholding (faw) attacks on bitcoin. In CCS, 2017. URL: https://doi.org/10.1145/3133956.3134019.
  30. Joshua Lind, Oded Naor, Ittay Eyal, Florian Kelbert, Emin Gün Sirer, and Peter R. Pietzuch. Teechain: a secure payment network with asynchronous blockchain access. In Proceedings of the 27th ACM Symposium on Operating Systems Principles, pages 63-79, 2019. Google Scholar
  31. Giulio Malavolta, Pedro Moreno-Sanchez, Aniket Kate, and Matteo Maffei. Silentwhispers: Enforcing security and privacy in decentralized credit networks. In 24th Annual Network and Distributed System Security Symposium, 2017. Google Scholar
  32. Patrick McCorry, Surya Bakshi, Iddo Bentov, Sarah Meiklejohn, and Andrew Miller. Pisa: Arbitration outsourcing for state channels. In Proceedings of the 1st ACM Conference on Advances in Financial Technologies, pages 16-30. ACM, 2019. Google Scholar
  33. Roger B Myerson and Mark A Satterthwaite. Efficient mechanisms for bilateral trading. Journal of Economic Theory, 29(2):265-281, 1983. URL: https://doi.org/10.1016/0022-0531(83)90048-0.
  34. Tejaswi Nadahalli, Majid Khabbazian, and Roger Wattenhofer. Timelocked bribing. In Financial Cryptography and Data Security, Lecture Notes in Computer Science, 2021. Google Scholar
  35. Satoshi Nakamoto. Bitcoin: A peer-to-peer electronic cash system, 2008. Google Scholar
  36. Rafael Pass and Elaine Shi. Fruitchains: A fair blockchain. In PODC, 2017. URL: https://doi.org/10.1145/3087801.3087809.
  37. Krzysztof Pietrzak, Iosif Salem, Stefan Schmid, and Michelle Yeo. Lightpir: Privacy-preserving route discovery for payment channel networks. In Zheng Yan, Gareth Tyson, and Dimitrios Koutsonikolas, editors, IFIP Networking Conference, IFIP Networking 2021, Espoo and Helsinki, Finland, June 21-24, 2021, pages 1-9. IEEE, 2021. URL: https://doi.org/10.23919/IFIPNetworking52078.2021.9472205.
  38. Joseph Poon and Thaddeus Dryja. The bitcoin lightning network: Scalable off-chain instant payments, 2015. Google Scholar
  39. Stefanie Roos, Pedro Moreno-Sanchez, Aniket Kate, and Ian Goldberg. Settling payments fast and private: Efficient decentralized routing for path-based transactions. arXiv preprint arXiv:1709.05748, 2017. Google Scholar
  40. Tim Roughgarden. Selfish routing and the price of anarchy. MIT press, 2005. Google Scholar
  41. Ayelet Sapirshtein, Yonatan Sompolinsky, and Aviv Zohar. Optimal selfish mining strategies in bitcoin. In FC, 2016. URL: https://doi.org/10.1007/978-3-662-54970-4_30.
  42. Okke Schrijvers, Joseph Bonneau, Dan Boneh, and Tim Roughgarden. Incentive compatibility of bitcoin mining pool reward functions. In FC, 2016. URL: https://doi.org/10.1007/978-3-662-54970-4_28.
  43. Vibhaalakshmi Sivaraman, Shaileshh Bojja Venkatakrishnan, Kathleen Ruan, Parimarjan Negi, Lei Yang, Radhika Mittal, Giulia Fanti, and Mohammad Alizadeh. High throughput cryptocurrency routing in payment channel networks. In 17th USENIX Symposium on Networked Systems Design and Implementation (NSDI 20), pages 777-796, 2020. Google Scholar
  44. Jason Teutsch, Sanjay Jain, and Prateek Saxena. When cryptocurrencies mine their own business. In FC, 2016. URL: https://doi.org/10.1007/978-3-662-54970-4_29.
  45. Samarth Tiwari, Michelle Yeo, Zeta Avarikioti, Iosif Salem, Krzysztof Pietrzak, and Stefan Schmid. Wiser: Increasing throughput in payment channel networks with transaction aggregation. CoRR, abs/2205.11597, 2022. URL: https://doi.org/10.48550/arXiv.2205.11597.
  46. Somanath Tripathy and Susil Kumar Mohanty. Mappcn: Multi-hop anonymous and privacy-preserving payment channel network. In International Conference on Financial Cryptography and Data Security, pages 481-495. Springer, 2020. Google Scholar
  47. Itay Tsabary, Matan Yechieli, and Ittay Eyal. MAD-HTLC: because HTLC is crazy-cheap to attack. IEEE S&P, 2021. URL: https://arxiv.org/abs/2006.12031.
  48. Yuup Van Engelshoven and Stefanie Roos. The merchant: Avoiding payment channel depletion through incentives. In 2021 IEEE International Conference on Decentralized Applications and Infrastructures (DAPPS), pages 59-68. IEEE, 2021. Google Scholar
  49. Sarisht Wadhwa, Jannis Stoeter, Fan Zhang, and Kartik Nayak. He-HTLC: Revisiting Incentives in HTLC. In 30th Annual Network and Distributed System Security Symposium, NDSS 2023, San Diego, California, USA, February 27 - March 3, 2023. The Internet Society, 2023. URL: https://www.ndss-symposium.org/ndss-paper/he-htlc-revisiting-incentives-in-htlc/.
  50. Gavin Wood. Ethereum: A secure decentralised generalised transaction ledger. Ethereum Project Yellow Paper, 2014. Google Scholar
Questions / Remarks / Feedback
X

Feedback for Dagstuhl Publishing


Thanks for your feedback!

Feedback submitted

Could not send message

Please try again later or send an E-mail
© 2023-2024 Schloss Dagstuhl – LZI GmbH Imprint Privacy Contact