SoK: Payment Channel Networks

Payment Channel Networks (PCNs) have been proposed as an alternative solution to the scalability, throughput, and cost overhead problems associated with blockchain transactions. By facilitating offchain execution of transactions, PCNs significantly reduce the burden on the blockchain, leading to faster transaction processing, reduced transaction fees, and enhanced privacy. Despite these advantages, the current state-of-the-art in PCNs presents a variety of challenges that require further exploration. In this paper, we survey several fundamental aspects of PCNs, such as pathfinding and routing, virtual channels, and payment channel hubs. We aim to provide the reader with a detailed understanding of the various aspects of PCN research, highlighting important advancements. Additionally, we highlight the various unresolved challenges in this area. Specifically, this paper seeks to answer the following crucial question: What are the various interesting and non-trivial challenges in fundamental infrastructure design leading to efficient transaction processing in PCN research that require immediate attention from the academic and research community? By addressing this question, we aim to identify the most pressing problems and future research directions, and we hope to inspire researchers and practitioners to tackle these challenges to make PCNs more secure and versatile.

I. Introduction

Cryptocurrencies and cryptocurrency based transactions have become increasingly popular. Currently, the total market value of all cryptocurrencies in use has surpassed 2.5 Trillion USD, and the cryptocurrency market is increasing at a rate of ≈ 8.00% every year [1] . This rise in popularity can be attributed to the following reasons: 1) cryptocurrency transactions can be carried out without the presence of a trusted entity, while fiat currency based transactions require the presence of a trusted financial organization such as a bank. 2) cryptocurrency transactions do not subject the user to any limits on the number and type of transactions. Fiat currency based transactions are limited in their amount and number, depending on several factors such as the currency, geographical location, etc. [2] .