On the difficulty of hiding the balance of lightning network channels

The Lightning Network is a second layer technology running on top of Bitcoin and other Blockchains. It is composed of a peer-to-peer network, used to transfer raw information data. Some of the links in the peer-to-peer network are identified as payment channels, used to conduct payments between two Lightning Network clients (i.e., the two nodes of the channel). Payment channels are created with a fixed credit amount, the channel capacity. The channel capacity, together with the IP address of the nodes, is published to allow a routing algorithm to find an existing path between two nodes that do not have a direct payment channel. However, to preserve users' privacy, the precise balance of the pair of nodes of a given channel (i.e. the bandwidth of the channel in each direction), is kept secret. Since balances are not announced, second-layer nodes probe routes iteratively, until they find a successful route to the destination for the amount required, if any. This feature makes the routing discovery protocol less efficient but preserves the privacy of channel balances. In this paper, we present an attack to disclose the balance of a channel in the Lightning Network. Our attack is based on performing multiple payments ensuring that none of them is finalized, minimizing the economical cost of the attack. We present experimental results that validate our claims, and countermeasures to handle the attac

On the difficulty of hiding the balance of lightning network channels

International audienceThe Lightning Network is a second layer technology running on top of Bitcoin and other Blockchains. It is composed of a peer-to-peer network, used to transfer raw information data. Some of the links in the peer-to-peer network are identified as payment channels, used to conduct payments between two Lightning Network clients (i.e., the two nodes of the channel). Payment channels are created with a fixed credit amount, the channel capacity. The channel capacity, together with the IP address of the nodes, is published to allow a routing algorithm to find an existing path between two nodes that do not have a direct payment channel. However, to preserve users' privacy, the precise balance of the pair of nodes of a given channel (i.e. the bandwidth of the channel in each direction), is kept secret. Since balances are not announced, second-layer nodes probe routes iteratively, until they find a successful route to the destination for the amount required, if any. This feature makes the routing discovery protocol less efficient but preserves the privacy of channel balances. In this paper, we present an attack to disclose the balance of a channel in the Lightning Network. Our attack is based on performing multiple payments ensuring that none of them is finalized, minimizing the economical cost of the attack. We present experimental results that validate our claims, and countermeasures to handle the attack

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

Towards an Economic Analysis of Routing in Payment Channel Networks

Payment channel networks are supposed to overcome technical scalability limitations of blockchain infrastructure by employing a special overlay network with fast payment confirmation and only sporadic settlement of netted transactions on the blockchain. However, they introduce economic routing constraints that limit decentralized scalability and are currently not well understood. In this paper, we model the economic incentives for participants in payment channel networks. We provide the first formal model of payment channel economics and analyze how the cheapest path can be found. Additionally, our simulation assesses the long-term evolution of a payment channel network. We find that even for small routing fees, sometimes it is cheaper to settle the transaction directly on the blockchain.Comment: 6 pages, 3 figures, SERIAL '17 Worksho

Ant routing algorithm for the Lightning Network

We propose a decentralized routing algorithm that can be implemented in Bitcoin Lightning Network. All nodes in the network contribute equally to path searching. The algorithm is inspired from ant path searching algorithms.Comment: 10 pages, 1 figur