Assuming rational parties and watchtowers - Will a party commit - PowerPoint PPT Presentation

Assuming rational parties and watchtowers… - Will a party commit fraud? - Will a watchtower get paid? - Will a party commit fraud? - Will a watchtower get paid? - Will a party commit fraud? ...

Watchtowers → Active Inactive Parties ↓ Fraud No Fraud

Premiums Watchtowers → Active Inactive Parties ↓ Fraud No Fraud

Collateral

#σ A (σ A ⋀ Δt) ⋁ σ AB σ AB a a Funding Commitment a+b #σ B σ B (1) On-chain Published by A b b (σ A ⋀ Δt) ⋁ σ AB σ AB σ B a i Commitment Revocation a i σ B (i) Published by A Published by B, W b i (σ A ⋀ Δt) ⋁ σ AB a i+1 Commitment σ B (i+1) Published by A b i+1

#σ A (σ A ⋀ Δt) ⋁ σ AW σ AB a a Funding Commitment a+b #σ B σ BW (1) On-chain Published by A b b (σ A ⋀ Δt) ⋁ σ AW σ AW σ B a i Commitment Revocation a i +b i σ BW (i) Published by A Published by B, W b i (σ A ⋀ Δt) ⋁ σ AW σ B a i+1 Commitment Penalty 1 c +b i σ BW (i+1) Published by A Published by B b i+1 σ BW #σ W Reclaim Collateral c c Published by W On-chain

#σ A (σ A ⋀ Δt) ⋁ σ AW σ AB a a Funding Commitment a+b #σ B (σ B ⋀ Δt) ⋁ σ BW (1) On-chain Published by A b b (σ A ⋀ Δt) ⋁ σ AW σ AW σ B a i Commitment Revocation a i +b i (σ B ⋀ Δt) ⋁ σ BW σ BW (i) Published by A Published by B, W b i (σ A ⋀ Δt) ⋁ σ AW σ B ⋀ Δt σ B a i+1 Commitment Penalty 1 c +b i (σ B ⋀ Δt) ⋁ σ BW (i+1) Published by A Published by B b i+1 σ BW #σ W Reclaim Collateral c c Published by W On-chain

#σ A (σ A ⋀ Δt) ⋁ σ AW σ AB a a Funding Commitment a+b #σ B (σ B ⋀ Δt) ⋁ σ BW (1) On-chain Published by A b b (σ A ⋀ Δt) ⋁ σ AW σ AW σ B a i Commitment Revocation a i +b i (σ B ⋀ Δt) ⋁ σ BW σ BW (i) Published by A Published by B, W b i (σ A ⋀ Δt) ⋁ σ AW σ B ⋀ Δt σ B a i+1 Commitment Penalty 1 c +b i (σ B ⋀ Δt) ⋁ σ BW (i+1) Published by A Published by B b i+1 σ B ⋀ Δt σ BW σ B #σ W (σ W ⋀ ΔΤ) ⋁ σ BW σ BW Reclaim Collateral Penalty 2 c c c +b i c Published by W On-chain Published by B

Funding Commitment Dispute period

Eclipse ➔ Censor ➔ Congestion ➔ Funding Commitment Dispute period

? s l e n n a h c s u o n o r h c n y s A

Funding Close Signatures of Alice & Bob OR Signatures of ⅔ WT & (Alice or Bob)

1) Consensus is costly 2) Privacy is important 3) Incentives are critical

O(n) communication complexity for state ➔ updates Verification of consensus between Alice & ➔ Bob No liveness guarantees, if Alice & Bob ➔ both misbehave Consensus needed only for closing, if ➔ there is a dispute

H( ) H( ) H( ) Privacy preserving ➔ Alice/Bob cannot publish a previous ➔ transaction

H( ) (3) Execute (3) Execute (1) Update H( ) H( ) (2) Consistent (2) Consistent Broadcast Broadcast

- Unilateral channel for fees: Repeated game lifts fair exchange impossibility - Fees for closing the channels: Only payable in dispute → Incentive to agree - Collateral for anti-bribing: Reduction to fair-exchange WT Committee size ↑ → per WT collateral ↓

● Asynchronous channels ● Security even under L1 failure ● Privacy ● Incentive-compatible ● Embarrassingly parallel ● Linear communication [Avarikioti et al. Brick: Asynchronous State Channels .]