Enhancing Scalability with Payment Requests Aggregation in Lightning Network

MasterLightning Network is the promising off-chain payment solution that resolves the performance and scalability issues on Bitcoin, which is the trustless e-cash system based on blockchain. However, Lightning Network provides a limited scalability, bound by channel liquidity and payment request bandwidth (currently 483 for each direction), which is too small for practical applications. In this thesis, we propose a scheme aggregating payment requests to extend the bandwidth. The proposed scheme maintains a two-layer structure instead of the original one with only one commitment transaction layer. The scheme aggregates a set of conditional outputs (i.e., in-flight payment requests) into a single aggregated output in the commitment transaction. The conditional outputs used for the aggregation are moved to the second-layer commitment transaction, termed the Stash transaction. We also propose another condition for redeeming the aggregated payment requests altogether with the aggregated redeeming transaction to reduce the on-chain processing fees when the payment channel is unilaterally closed. We evaluate the increased bandwidth of the proposed scheme and the reduced fees when the proposed scheme adopts the aggregation strategy of distributing payment requests into several aggregated outputs to increase the probability of making aggregated redeeming transactions. The scheme increases the bandwidth to accommodate more than 100K payment requests for each direction. The overall on-chain transaction fees are reduced by 44.8% when a few payment requests are within the aggregated output under a high success ratio of payment requests. One disadvantage of the proposed scheme is that it increases the number of signings for every channel update, which is also evaluated