Hello all, I am not sure if this is the right place for this, but I have been thinking about the lightning network and how it could be modified so that fewer total channels would need to be open. I had the idea for a specific kind of transaction, in which three parties commit their funds all at once, and are able to move their funds between the three open channels between them. I will give a rough overview of my idea and give an example that I think illustrates how it could improve users' ability to route their transactions.
Say that three parties, A, B, and C, create a special commitment transaction on the network that creates three open channels between each of them with a pre-specified balance in each channel. Now, these channels would be lightning network channels, and so the three of them could transact with each other and modify balances in their individual channels at will. However, this special agreement between the three of them also has the property than they can move their funds *between *channels, provided they have the permission of the counterparty to the channel they move their funds from, and then presents this to the other counterparty to show that funds have been moved. 1.) A, B, and C each create a commitment transaction, committing .5 BTC (3 BTC in total) on their end of each of their channels. 2.) A, B, and C transact normally using the lightning protocol. After some amount of time, the channel balances are as follows: channel AB: A - 0.75, B - 0.25 channel BC: B - 0.4, C - 0.6, channel AC: A - 0, C: 1.0 3.) A would like to send .5 BTC to C, however she does not have enough funds in that channel to do so. It's also not possible for her to route her transaction through B, as B only has .4 in his channel with C. However, she does have those funds in her channel with B, and so asks for B's permission (in the form of a signed balance state that includes the hash of the previous balance), to move those funds over to her account with C. She gets this signed slip from B, and then presents it to C. 4.) A, B, and C continue trading on their update balances. 5.) When they wish to close out their channels, they all post the last signed balance statements each of them has. Say, for example, A and B were to collude and trade on their old balance (of .75 and .25) after Bsigning the statement that A was 'moving' funds to C. If A and C were trading on their new balances, C has proof of both A and B's collusion, and she can present the signed slip which said that A was moving funds to AC and so the total balance on A and B's channel should've summed to 0.5. In this event, All funds in all three channels are forfeited to C. I believe this works because, in virtue of being able to make inferences based on her own channel balances, C always knows (if she is following the protocol) exactly how much should be in channel AB. and can prove this. If there were 4 parties, C couldn't prove on her own that some set of parties colluded to trade on an old balance. Now, I'll show why such a mechanism can be useful. Now, assume that there are parties A, B, C, D, and E, and the following channels and balances exist (with the ones marked by a * part of the special three-way commitment): AB*: A - 1.0, B - 0 BC*: B - 0, C - 1.0 AC*: A - 0, C - 1.0 AD: D - 1.0, A - 0 CE: C - 1.0, E - 0 Now suppose D wishes to send E 1.0 BTC. With the current channel structure, this isn't possible in lightning without opening a new channel and waiting for the network to verify it. However, A can ask B to move her 1.0 in channel AB to channel AC (with maybe a very nominal fee to incentivise this), thereby enabling D to route 1.0 BTC from A to C and finally to E. I would appreciate your feedback on this idea and any questions you may have for further explanation. Best Regards, Abhishek Sharma Brown University Computer Science '18
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