2023/06/28 by Avarikioti, Zeta, Lizurej, Tomasz, Michalak, Tomasz +1 · 1 citation
#Computer Science and Game Theory (cs.GT) #Cryptography and Security (cs.CR) #FOS: Computer and information sciences
paper · doi:10.48550/arxiv.2306.16006
Payment channel networks (PCNs) are a promising solution to the scalability problem of cryptocurrencies. Any two users connected by a payment channel in the network can theoretically send an unbounded number of instant, costless transactions between them. Users who are not directly connected can also transact with each other in a multi-hop fashion. In this work, we study the incentive structure behind the creation of payment channel networks, particularly from the point of view of a single user that wants to join the network. We define a utility function for a new user in terms of expected revenue, expected fees, and the cost of creating channels, and then provide constant factor approximation algorithms that optimise the utility function given a certain budget. Additionally, we take a step back from a single user to the whole network and examine the parameter spaces under which simple graph topologies form a Nash equilibrium.