Print Email Facebook Twitter How to profit from payments channels Title How to profit from payments channels Author Ersoy, O. (TU Delft Cyber Security) Roos, S. (TU Delft Data-Intensive Systems) Erkin, Z. (TU Delft Cyber Security) Contributor Bonneau, Joseph (editor) Heninger, Nadia (editor) Date 2020 Abstract Payment channel networks like Bitcoin’s Lightning network are an auspicious approach for realizing high transaction throughput and almost-instant confirmations in blockchain networks. However, the ability to successfully conduct payments in such networks relies on the willingness of participants to lock collateral in the network. In Lightning, the key financial incentive to lock collateral are low fees for routing payments of other participants. While users can choose these fees, real-world data indicates that they mainly stick to default fees. By providing insights on beneficial choices for fees, we aim to incentivize users to lock more collateral and improve the effectiveness of the network. In this paper, we consider a node that given the network topology and the channel details establishes channels and chooses fees to maximize its financial gain. Our contributions are i) formalization of the optimization problem, ii) proving that the problem is NP-hard, and iii) designing and evaluating a greedy algorithm to approximate the optimal solution. In each step, our greedy algorithm establishes a channel that maximizes the increase to ’s total reward, which corresponds to maximizing the number of shortest paths passing through. Our simulation study leveraged real-world data sets to quantify the impact of our gain optimization and indicates that our strategy is at least a factor two better than other strategies. To reference this document use: http://resolver.tudelft.nl/uuid:baa39cc2-1a18-4c3d-a905-5d98de77d2cb DOI https://doi.org/10.1007/978-3-030-51280-4_16 Publisher Springer, Cham ISBN 978-3-030-51279-8 Source Proceedings of the 24th Financial Cryptography and Data Security, Kota Kinabalu, Sabah, Malaysia, 12059 Event Financial Cryptography and Data Security 2020, 2020-02-10 → 2020-02-14, Kota Kinabalu, Malaysia Series Lecture Notes in Computer Science (including subseries Lecture Notes in Artificial Intelligence and Lecture Notes in Bioinformatics), 0302-9743, 12059 LNCS Bibliographical note Coronavirus update: Authors whose travel is disrupted can arrange to give video presentations Part of collection Institutional Repository Document type conference paper Rights © 2020 O. Ersoy, S. Roos, Z. Erkin Files PDF main.pdf 478.78 KB Close viewer /islandora/object/uuid:baa39cc2-1a18-4c3d-a905-5d98de77d2cb/datastream/OBJ/view