Computer scientists from the Swiss university ETH Zürich have found a way to make off-blockchain payment networks even more scalable.
At the heart of this work lies bitcoin's years-old scaling debate, which comes down to the fact that bitcoin and all cryptocurrencies today have limited transaction capacity. To get around this, cryptocurrency protocols have developed payment channel networks that push transactions off-blockchain, such as bitcoin's Lightning Network, first proposed in 2015.
But researchers Rami Khalil and Arthur Gervais believe payment systems like the Lightning Network don't go far enough, and they've proposed the Revive payment channel model, an idea that would enable longer-lasting payment channels that interact even less with the blockchain.
The paper explains:
At its core, Revive allows users to securely move money from one channel to another off-blockchain, a departure from the Lightning Network's model.
As proposed, all Lightning-style networks need to use on-blockchain transactions (and the accompanying fees) to set up and close payment channels.
Users with multiple payment channels open – for example, one could stay open with a coffee shop, while another could pay for streaming TV – normally have to "rebalance" the channel via on-chain transactions every time a channel runs out of bitcoin.
Revive, on the other hand, allows money from the coffee channel to be sent to the TV streaming channel if its funds become depleted.
"As such, instead of refunding a channel (which incurs costly on-chain transactions), a user should be able to leverage his existing channels to rebalance a poorly funded channel," the paper explains.
It might seem like a small change, but every optimization could matter, especially at a time when on-chain transaction fees are increasing (and could increase even more if the cryptocurrencies become more popular).
The researchers go on to explain that Revive can be used for any Lightning Network-like project on any blockchain, including Raiden Network, an in-progress payment channel model for ethereum, where the researchers have released a Revive proof-of-concept.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.