Cryptology ePrint Archive: Report 2019/360

SoK: Off The Chain Transactions

Lewis Gudgeon and Pedro Moreno-Sanchez and Stefanie Roos and Patrick McCorry and Arthur Gervais

Abstract: Blockchains have the potential to revolutionize markets and services, yet, currently exhibit high latencies and fail to handle loads comparable to those managed by traditional custodian financial systems. Layer-two protocols, built on top of (layer-one) blockchains, avoid disseminating every transaction to the whole network by sending transactions off-chain and instead utilize the blockchain only as a recourse for disputes. The promise of layer-two protocols is to complete transactions in sub-seconds, reduce fees, and allow blockchains to scale. With this Systematization of Knowledge, we are the first to structure the complete rich and multifaceted body of research on layer-two transactions. Categorizing the research into payment and state channels as well as commit-chains, we provide a comparison of the protocols and their properties. We contribute a systematization of the associated synchronization and routing protocols along with their privacy and security aspects. Contrary to common belief in the blockchain community, we show that layer-two can scale blockchains; that layer-two protocols are secure without full collateralization; that privacy of layer-two transaction is not granted by default; and that fees depend on the transmitted transaction value. The SoK clears the layer-two fog, highlights the potential of layer-two solutions and identifies their unsolved challenges and promising avenues of future work.

Category / Keywords: applications / blockchain, sok, payment channels, state channels, commit-chains

Date: received 3 Apr 2019

Contact author: l gudgeon18 at imperial ac uk,pedro sanchez@tuwien ac at,s roos@tudelft nl,patrick mccorry@kcl ac uk,a gervais@imperial ac uk

Available format(s): PDF | BibTeX Citation

Version: 20190410:001850 (All versions of this report)

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