Cryptology ePrint Archive: Report 2019/360

SoK: Layer-Two Blockchain Protocols

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. However, they currently exhibit high latencies and fail to handle transaction loads comparable to those managed by traditional financial systems. Layer-two protocols, built on top of layer-one blockchains, avoid disseminating every transaction to the whole network by exchanging authenticated transactions off-chain. Instead, they utilize the expensive and low-rate blockchain only as a recourse for disputes. The promise of layer-two protocols is to complete off-chain transactions in sub-seconds rather than minutes or hours while retaining asset security, reducing fees and allowing blockchains to scale.

We systematize the evolution of layer-two protocols over the period from the inception of cryptocurrencies in 2009 until today, structuring the multifaceted body of research on layer-two transactions. Categorizing the research into payment and state channels, commit-chains and protocols for refereed delegation, we provide a comparison of the protocols and their properties. We provide a systematization of the associated synchronization and routing protocols along with their privacy and security aspects. This Systematization of Knowledge (SoK) clears the layer-two fog, highlights the potential of layer-two solutions and identifies their unsolved challenges, indicating propitious avenues of future work.

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

Original Publication (with minor differences): Financial Cryptography and Data Security 2020

Date: received 3 Apr 2019, last revised 23 Mar 2020

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: 20200323:195228 (All versions of this report)

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