Hubs, Rebalancing and Service Providers in the Lightning Network

Conoscenti, Marco; Vetrò, Antonio; Martin, Juan Carlos De

doi:10.1109/access.2019.2941448

Cited by 28 publications

(9 citation statements)

References 12 publications

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“…A user can open payment channels with multiple users at the same time. Therefore, the payment channel network is an undirected network of Bitcoin users connected by payment channels where off-chain payments are routed [80]. Information about live payment channels can be found on monitoring websites such as hashxp.org, 1ml.com, and lndexplorer.com [81].…”

Section: Lightning Networkmentioning

confidence: 99%

Knowledge Discovery in Cryptocurrency Transactions: A Survey

et al. 2021

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Cryptocurrencies gain trust in users by publicly disclosing the full creation and transaction history. In return, the transaction history faithfully records the whole spectrum of cryptocurrency user behaviors. This article analyzes and summarizes the existing research on knowledge discovery in the cryptocurrency transactions using data mining techniques. Specifically, we classify the existing research into three aspects, i.e., transaction tracings and blockchain address linking, the analyses of collective user behaviors, and the study of individual user behaviors. For each aspect, we present the problems, summarize the methodologies, and discuss major findings in the literature. Furthermore, an enumeration of transaction data parsing and visualization tools and services is also provided. Finally, we outline several gaps and trends for future investigation in this research area.

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Section: Lightning Networkmentioning

confidence: 99%

Knowledge Discovery in Cryptocurrency Transactions: A Survey

et al. 2021

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“…Martinazzi [40] and Seres et al [55] study the evolution of topological aspects of the LN graph. Conoscenti et al [19] study the dependency of the LN on payment hubs and the rebalancing mechanisms that ameliorate the effect of depleted channels. Tochner et al [60] analyze a DoS attack vector based on route hijacking.…”

Section: Related Workmentioning

confidence: 99%

A Quantitative Analysis of Security, Anonymity and Scalability for the Lightning Network

Tikhomirov

Moreno-Sanchez

Maffei

2020

2020 IEEE European Symposium on Security and Privacy Workshops (EuroS&PW)

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Payment channel networks have been introduced to mitigate the scalability issues inherent to permissionless decentralized cryptocurrencies such as Bitcoin. Launched in 2018, the Lightning Network (LN) has been gaining popularity and consists today of more than 5000 nodes and 35000 payment channels that jointly hold 965 bitcoins (9.2M USD as of June 2020). This adoption has motivated research from both academia and industry.Payment channels suffer from security vulnerabilities, such as the wormhole attack [39], anonymity issues [38], and scalability limitations related to the upper bound on the number of concurrent payments per channel [28], which have been pointed out by the scientific community but never quantitatively analyzed.In this work, we first analyze the proneness of the LN to the wormhole attack and attacks against anonymity. We observe that an adversary needs to control only 2% of nodes to learn sensitive payment information (e.g., sender, receiver, and amount) or to carry out the wormhole attack. Second, we study the management of concurrent payments in the LN and quantify its negative effect on scalability. We observe that for micropayments, the forwarding capability of up to 50% of channels is restricted to a value smaller than the channel capacity. This phenomenon hinders scalability and opens the door for denial-of-service attacks: we estimate that a network-wide DoS attack costs within 1.6M USD, while isolating the biggest community costs only 238k USD.Our findings should prompt the LN community to consider the issues studied in this work when educating users about path selection algorithms, as well as to adopt multi-hop payment protocols that provide stronger security, privacy and scalability guarantees.

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“…In contrast, our algorithm only requires opening a few entry channels for probing the whole network using arbitrarily long routes. 8 Conoscenti et al [8] analyzed the influence of hubs on LN and proposed a channel rebalancing algorithm.…”

Section: Related Workmentioning

confidence: 99%

Probing Channel Balances in the Lightning Network

Tikhomirov,

Pickhardt,

Biryukov

et al. 2020

Preprint

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Payment channel networks (PCN) have been introduced to solve scalability problem of permissionless blockchains such as Bitcoin. The Lightning Network (LN), launched in 2018, is the most prominent PCN built on top of Bitcoin. As of March 2020, LN consists of over 11 thousand nodes and 36 thousand channels, collectively holding nearly 900 bitcoins (7.8M USD).A payment channel allows two parties to lock funds in a multisignature address and then modify the distribution of funds in nearly instant transactions, without confirming them in the blockchain. As LN transactions are not broadcast and not publicly stored, LN has been seen not only as scalability but also as privacy solution. The protocol guarantees that only the latest channel state can be confirmed on channel closure. LN also supports multi-hop payments, where the balances of multiple channels along a path are moved. The atomicity of this process is guaranteed by hash time-locked contracts (HTLC). LN nodes gossip about channels available for routing and their total capacities. To issue a (multi-hop) payment, the sender creates a route based on its local knowledge of the graph. As local channel balances are not public, payments often fail due to insufficient balance at an intermediary hop. In that case, the payment is attempted along multiple routes until it succeeds. This constitutes a privacy-efficiency tradeoff: hidden balances improve privacy but hinder routing efficiency.In this work, we show that an attacker can easily discover channel balances using probing. This takes under a minute per channel and requires moderate capital commitment and no expenditures (the attacker's funds are only temporarily locked). We describe the algorithm and test our proofof-concept implementation on Bitcoin's testnet. We argue that LN's balance between privacy and routing efficiency is suboptimal: channel balances are neither well protected nor utilized.We outline two ways for LN to evolve in respect to this issue. To emphasize privacy, we propose a modification of error handling that hides details of the erring channel from the sending node. This would break our probing technique but make routing failures more common, as the sender would not know which channel from the attempted route has failed. To improve efficiency, we propose a new API call that would let the sender query balances of channels that it is not a party of. We argue that combining these approaches can help LN take the best of both worlds: hide private data when feasible, and utilize public data for higher routing efficiency.

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Hubs, Rebalancing and Service Providers in the Lightning Network

Cited by 28 publications

References 12 publications

Knowledge Discovery in Cryptocurrency Transactions: A Survey

Knowledge Discovery in Cryptocurrency Transactions: A Survey

A Quantitative Analysis of Security, Anonymity and Scalability for the Lightning Network

Probing Channel Balances in the Lightning Network

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