A Composable Security Treatment of the Lightning Network

Kiayias, Aggelos; Litos, Orfeas Stefanos Thyfronitis

doi:10.1109/csf49147.2020.00031

Cited by 22 publications

(9 citation statements)

References 28 publications

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“…How to improve the security performance and operating efficiency of the blockchain is the key technical challenge for the blockchain to achieve large-scale issuance and trading in the securities market in the future. At present, some scholars have discussed key technologies on blockchain performance improvement technology, such as sharding [99], scalable consensus [100], snowflake to avalanche [101], directed acyclic graphic [102], off-chain computing, layer two lightning network [103], hash algorithm optimization [104] and so on. Since this survey mainly discusses articles related to primary financial market applications, thus, we will not discuss the performance improvement literatures in the paper.…”

Section: Current Status Of Primary Marketmentioning

confidence: 99%

Applying blockchain for primary financial market: A survey

Li³

et al. 2021

IET Blockchain

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In financial market, especially primary market, it is very costly and difficult to make a deal due to discovery difficulty, information asymmetry, lack of trust, complicated trading process and low liquidity. Blockchain is an innovative technology enabling new business models of distributed data storage, point-to-point transaction and decentralized autonomous organizations via consensus. The unique features of blockchain, 'decentralization, highly transparent, enhanced security and immutability of information', make it a good solution candidate to meet the needs of private equity exchange. This article focuses on analysing the technical basis of the blockchain financial model and the typical application scenarios of the blockchain in the financial market. It discusses the importance of applying key blockchain technology to the financial market, especially in the primary market. Research has found that the development of blockchain technology, especially the maturity of stabilized token technology, makes it possible for blockchain to become a supporting technology to support the next generation of infrastructure in the future financial market. At present, blockchain technology has been concentrated in the issuance, registration, clearing, settlement and derivatives management of private equity and other over-the-counter securities. The use of blockchain to build a decentralized primary market has not received enough attention in research and practice, and the use of blockchain technology to establish a primary market with diverse distribution methods is still in its infancy. On this basis, this article further analyses the current problems and the possibility of solving these problems in the application of blockchain in the primary market and points out several interesting directions for future research in this field.

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Section: Current Status Of Primary Marketmentioning

confidence: 99%

Applying blockchain for primary financial market: A survey

Li³

et al. 2021

IET Blockchain

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“…However, these constructions only support simple payments and do not extend to support more complex transaction logic. The authors in [34] provide a formalization of the Lightning Network (LN) in the UC framework. This formalization is, however, tailored to the details of the current LN and cannot be leveraged to formalize generalized channels as we propose here.…”

Section: Other Related Workmentioning

confidence: 99%

Generalized Channels from Limited Blockchain Scripts and Adaptor Signatures

Aumayr

Ersoy

Erwig

et al. 2021

Lecture Notes in Computer Science

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Decentralized and permissionless ledgers offer an inherently low transaction rate, as a result of their consensus protocol demanding the storage of each transaction on-chain. A prominent proposal to tackle this scalability issue is to utilize off-chain protocols, where parties only need to post a limited number of transactions on-chain. Existing solutions can roughly be categorized into: (i) application-specific channels (e.g., payment channels), offering strictly weaker functionality than the underlying blockchain; and (ii) state channels, supporting arbitrary smart contracts at the cost of being compatible only with the few blockchains having Turing-complete scripting languages (e.g., Ethereum).In this work, we introduce and formalize the notion of generalized channels allowing users to perform any operation supported by the underlying blockchain in an off-chain manner. Generalized channels thus extend the functionality of payment channels and relax the definition of state channels. We present a concrete construction compatible with any blockchain supporting transaction authorization, time-locks and constant number of Boolean ∧ and ∨ operations -requirements fulfilled by many (non-Turing-complete) blockchains including the popular Bitcoin. To this end, we leverage adaptor signatures -a cryptographic primitive already used in the cryptocurrency literature but formalized as a standalone primitive in this work for the first time. We formally prove the security of our generalized channel construction in the Universal Composability framework.As an important practical contribution, our generalized channel construction outperforms the state-of-the-art payment channel construction, the Lightning Network, in efficiency. Concretely, it halves the off-chain communication complexity and reduces the on-chain footprint in case of disputes from linear to constant in the number of off-chain applications funded by the channel. Finally, we evaluate the practicality of our construction via a prototype implementation and discuss various applications including financially secured fair two-party computation.

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“…Kiayias and Litos provide in [10] a formalization and security analysis of the Lightning Network using a global ledger functionality modeled in [2]. The global ledger fulfills a global synchrony property: An honest user that is connected to the required resources is being synchronized (receives the latest state) within a bounded time.…”

Section: Related Workmentioning

confidence: 99%

Fundamental Properties of the Layer Below a Payment Channel Network

Grundmann

Hartenstein

2020

Lecture Notes in Computer Science

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Payment channel networks are a highly discussed approach for improving scalability of cryptocurrencies such as Bitcoin. As they allow processing transactions off-chain, payment channel networks are referred to as second layer technology, while the blockchain is the first layer. We uncouple payment channel networks from blockchains and look at them as first-class citizens. This brings up the question what model payment channel networks require as first layer. In response, we formalize a model (called RFL model) for a first layer below a payment channel network. While transactions are globally made available by a blockchain, the RFL model only provides the reduced property that a transaction is delivered to the users being affected by a transaction. We show that the reduced model's properties still suffice to implement payment channels. By showing that the RFL model can not only be instantiated by the Bitcoin blockchain but also by trusted third parties like banks, we show that the reduction widens the design space for the first layer. Further, we show that the stronger property provided by blockchains allows for optimizations that can be used to reduce the time for locking collateral during payments over multiple hops in a payment channel network.

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A Composable Security Treatment of the Lightning Network

Cited by 22 publications

References 28 publications

Applying blockchain for primary financial market: A survey

Applying blockchain for primary financial market: A survey

Generalized Channels from Limited Blockchain Scripts and Adaptor Signatures

Fundamental Properties of the Layer Below a Payment Channel Network

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