SoK: Layer-Two Blockchain Protocols

Blockchains have the potential to revolutionize markets and services. However, they currently exhibit high latencies and fail to handle transaction loads comparable to those managed by traditional financial systems. Layer-two protocols, built on top of layer-one blockchains, avoid disseminating every transaction to the whole network by exchanging authenticated transactions off-chain. Instead, they utilize the expensive and low-rate blockchain only as a recourse for disputes. The promise of layer-two protocols is to complete off-chain transactions in sub-seconds rather than minutes or hours while retaining asset security, reducing fees and allowing blockchains to scale. We systematize the evolution of layer-two protocols over the period from the inception of cryptocurrencies in 2009 until today, structuring the multifaceted body of research on layer-two transactions. Categorizing the research into payment and state channels, commit-chains and protocols for refereed delegation, we provide a comparison of the protocols and their properties. We provide a systematization of the associated synchronization and routing protocols along with their privacy and security aspects. This Systematization of Knowledge (SoK) clears the layer-two fog, highlights the potential of layer-two solutions and identifies their unsolved challenges, indicating propitious avenues of future work

DLSAG: Non-Interactive Refund Transactions For Interoperable Payment Channels in Monero

Monero has emerged as one of the leading cryptocurrencies with privacy by design. However, this comes at the price of reduced expressiveness and interoperability as well as severe scalability issues. First, Monero is restricted to coin exchanges among individual addresses and no further functionality is supported. Second, transactions are authorized by linkable ring signatures, a digital signature scheme only available in Monero, hindering thereby the interoperability with the rest of cryptocurrencies. Third, Monero transactions require high on-chain footprint, which leads to a rapid ledger growth and thus scalability issues. In this work, we extend Monero expressiveness and interoperability while mitigating its scalability issues. We present \emph{Dual Linkable Spontaneous Anonymous Group Signature for Ad Hoc Groups (DLSAG)}, a novel linkable ring signature scheme that enables for the first time \emph{refund transactions} natively in Monero: DLSAG can seamlessly be implemented along with other cryptographic tools already available in Monero such as commitments and range proofs. We formally prove that DLSAG achieves the same security and privacy notions introduced in the original linkable ring signature~\cite{Liu2004} namely, unforgeability, signer ambiguity, and linkability. We have evaluated DLSAG and showed that it imposes even slightly lower computation and similar communication overhead than the current digital signature scheme in Monero, demonstrating its practicality. We further show how to leverage DLSAG to enable off-chain scalability solutions in Monero such as payment channels and payment-channel networks as well as atomic swaps and interoperable payments with virtually all cryptocurrencies available today. DLSAG is currently being discussed within the Monero community as an option for possible adoption as a key building block for expressiveness, interoperability, and scalability