Paper 2022/1385

Deep Reinforcement Learning-based Rebalancing Policies for Profit Maximization of Relay Nodes in Payment Channel Networks

Nikolaos Papadis, Yale University
Leandros Tassiulas, Yale University

Payment channel networks (PCNs) are a layer-2 blockchain scalability solution, with its main entity, the payment channel, enabling transactions between pairs of nodes "off-chain," thus reducing the burden on the layer-1 network. Nodes with multiple channels can serve as relays for multihop payments over a path of channels: they relay payments of others by providing the liquidity of their channels, in exchange for part of the amount withheld as a fee. Relay nodes might after a while end up with one or more unbalanced channels, and thus need to trigger a rebalancing operation. In this paper, we study how a relay node can maximize its profits from fees by using the rebalancing method of submarine swaps. We introduce a stochastic model to capture the dynamics of a relay node observing random transaction arrivals and performing occasional rebalancing operations, and express the system evolution as a Markov Decision Process. We formulate the problem of the maximization of the node's fortune over time over all rebalancing policies, and approximate the optimal solution by designing a Deep Reinforcement Learning (DRL)-based rebalancing policy. We build a discrete event simulator of the system and use it to demonstrate the DRL policy's superior performance under most conditions by conducting a comparative study of different policies and parameterizations. In all, our approach aims to be the first to introduce DRL for network optimization in the complex world of PCNs.

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Payment Channel NetworkLightning Networkrebalancingsubmarine swapDeep Reinforcement Learningoptimizationsimulation
Contact author(s)
nikolaos papadis @ yale edu
leandros tassiulas @ yale edu
2022-10-14: approved
2022-10-13: received
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      author = {Nikolaos Papadis and Leandros Tassiulas},
      title = {Deep Reinforcement Learning-based Rebalancing Policies for Profit Maximization of Relay Nodes in Payment Channel Networks},
      howpublished = {Cryptology ePrint Archive, Paper 2022/1385},
      year = {2022},
      note = {\url{}},
      url = {}
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