A Composable Security Treatment of the Lightning Network

The high latency and low throughput of blockchain protocols constitute one of the fundamental barriers for their wider adoption.Overlay protocols, notably the lightning network, have been touted as the most viable direction for rectifying this in practice. In this work we present for the first time a full formalisation and security analysis of the lightning network in the (global) universal composition setting that takes into account a global ledger functionality for which previous work [Badertscher et al., Crypto’17] has demonstrated its realisability by the Bitcoin blockchain protocol. As a result, our treatment delineates exactly how the security guarantees of the protocol depend on the properties of the underlying ledger. Moreover, we provide a complete and modular description of the core of the lightning protocol that highlights precisely its dependency to underlying basic cryptographic primitives such as digital signatures, pseudorandom functions, identity-based signatures and a less common two-party primitive, which we term a combined digital signature, that were originally hidden within the lightning protocol’s implementation

Verifying Payment Channels with TLA+

A payment channel protocol does not only have to provide the payment functionality, it also has to fulfill security guarantees such as ensuring that an honest party receives their correct balance. For complexity reasons, it is typically difficult to assess the security of such a protocol or to find counterexamples in insecure protocols. In this poster, we present an approach to specify functional as well as security properties for a payment channel protocol in TLA+ and show that a Lightning Network-style protocol fulfills the required properties. In case a counterexample is found, we provide protocol developers with a graphical and intuitive output. We present the challenges we faced and our approach to meeting these challenges

CryptoMaze: Atomic Off-Chain Payments in Payment Channel Network

Payment protocols developed to realize off-chain transactions in Payment channel network (PCN) assumes the underlying routing algorithm transfers the payment via a single path. However, a path may not have sufficient capacity to route a transaction. It is inevitable to split the payment across multiple paths. If we run independent instances of the protocol on each path, the execution may fail in some of the paths, leading to partial transfer of funds. A payer has to reattempt the entire process for the residual amount. We propose a secure and privacy-preserving payment protocol, CryptoMaze. Instead of independent paths, the funds are transferred from sender to receiver across several payment channels responsible for routing, in a breadth-first fashion. Payments are resolved faster at reduced setup cost, compared to existing state-of-the-art. Correlation among the partial payments is captured, guaranteeing atomicity. Further, two party ECDSA signature is used for establishing scriptless locks among parties involved in the payment. It reduces space overhead by leveraging on core Bitcoin scripts. We provide a formal model in the Universal Composability framework and state the privacy goals achieved by CryptoMaze. We compare the performance of our protocol with the existing single path based payment protocol, Multi-hop HTLC, applied iteratively on one path at a time on several instances. It is observed that CryptoMaze requires less communication overhead and low execution time, demonstrating efficiency and scalability.Comment: 30 pages, 9 figures, 1 tabl

Dependable and Scalable Public Ledger for Policy Compliance, a Blockchain Based Approach

Policies and regulations, such as the European Union General Data Protection Regulation (EU GDPR), have been enforced to protect personal data from abuse during storage and processing. We design and implement a prototype scheme that could 1) provide a public ledger of policy compliance to help the public make informative decisions when choosing data services; 2) provide support to the organizations for identifying violations and improve their ability of compliance. Honest organizations could then benefit from their positive records on the public ledger. To address the scalability problem inherent in the Blockchain-based systems, we develop algorithms and leverage state channels to implement an on-chain-hash-off-chain data structure. We identify the verification of the information from the external world as a critical problem when using Blockchains as public ledgers, and address this problem by the incentive-based trust model implied by state channels. We propose the Verifiable Off-Chain Message Channel as the integrated solution for leveraging blockchain technology as a general-purpose recording mechanism and support our thesis with performance experiments. Finally, we suggest a sticky policy mechanism as the evidence source for the public ledger to monitor cross-boundary policy compliance

The Impact of Layer 2 Technologies on the Adoption and Security of Blockchain

Numerous studies have raised concerns over the limited scalability of blockchain technologies and, in particular, Bitcoin. Layer 2 technologies have emerged as an advanced array of complementary innovations designed to solve this problem. Despite the growing optimism around layer 2 technologies, however, there is little evidence to show how they impact blockchain’s long-term success. This paper argues that the use and expansion of layer 2 technologies have a positive impact on the adoption and security levels of the underlying blockchain systems. Building on the Bitcoin and Lightning Network case, we use a time-series model based on 1,494 daily observations to demonstrate that the growing activity on the Lightning Network precipitates increased use and better security for Bitcoin. These results highlight the importance of layer 2 technologies for blockchain systems and suggest several further research avenues in this nascent domain of inquiry