Waves Platform Payment Channels

One of the most significant and most cited problems of current blockchain implementations is scalability. Here, a major strategy is to offload transactions from the major blockchain network, which still cryptographically secure the transfers in a way. The most prominent way of doing this, is payment channels, as used, e.g., in the Bitcoin Lightning network. The major idea of payment channels is that two parties agree on a certain amount of funds that can be exchanged via the payment channel, cryptographically secured, so that every party can be sure that it could close the channel at any point in time and receive the current distribution of the funds of the channel that belongs to him.

Usecases

There are a couple of different use cases in which payment channels might be of interest. In general, every transfer between two parties that do more than one stransfer between each other, can be done via a payment channel. Therefore, popular usecases are:

1. Micro Payments: if two parties do large numbers of small transactions, those micropayments can be implemented via a payment channel for free. Only the instantiation and closing of the channel costs the regular fees.
2. Two parties agree on a certain amount of funds to be exchanged over a certain period of time. This can once be implemented in a payment channel and then every transfer can be done if the service (or whatever the goods / service of exchange is) is delivered.
3. Performance: payment channels are often used also to increase the performance of a blockchain network. By cryptographically securing the funds in a payment channel, the single transactions of the payment channel do not need to be stored on the blockchain directly, but only the initialization and closing of the channel. Afterwards, thousands and ten-thousands of transaction can be made via the channel without using the bandwidth of the blockchain network, while at the same time implementing a certain level of security for both participants of the payment channel.
4. Networks of payment channels: as the Lightning network does, it is possible (based on additional implementations) to extend payment channels also to a network of payment channels, so that, in general, every transaction can be executed in this network, with the advantage of the low price per transaction and the increased performance.
5. ...

Prerequisites

This implementation of Payment Channels for the Waves network is implemented in NodeJS. Therefore, for using it a proper NodeJS installation is necessary, as described here. After its installation of NodeJS, the githup repo can be cloned by

git clone git@github.com:jansenmarc/WavesPaymentChannels.git

Afterwards, missing requirements can be installed by

npm install

from the cloned directory.

Usage

First of all, a configuration file needs to be created on both ends of the payment channel. Therefore, users have to exchange their public keys. See the example_config.json file for further details of the configuration file.

Setting up a payment channel

One of the users who participate in a payment channel can set up the payment channel via the following command:

node paymentChannels.js --setup --config=<config file>

Funding the payment channel

After the payment channel was successfully set up, each participant can fund the payment channel with a certain amount of Waves:

node paymentChannels.js --fund --amount=<amount in Wavelets> --config=<config file>

Payments in the channel

After funding, each participant can send transactions to the other party of the payment channel by:

node paymentChannels.js --pay --amount=<amount in Wavelets> --config=<config file>

This generates a JSON file with the filename of <address 1 of the payment channel>_<address 2 of the payment channel>.json, which needs to be send to the recipient of the transfer.

Initiate closing of a payment channel

Each participant can at any time decide to close the payment channel via the following command:

node paymentChannels.js --initiateClosing --config=<config file>

Confirm closing

After one party decided to close the payment channel, the other party can confirm this by:

node paymentChannels.js --confirmClosing --config=<config file>

Closing after timelock

If the other party does not confirm the closing of the channel within a certain amount of blocks, the initiator of the closing can finally cloase the payment channel via:

node paymentChannels.js --confirmCloseAfterTimelock --config=<config file>

Claim cheating

In case the initiator of the closing tried to close the payment channel with a wrong (outdated) state (distribution of funds), the other party can claim all funds of the payment channel and finally close it by:

node paymentChannels.js --claimCheating --config=<config file>

List all payment channels for an address

Each participant can show a list of payment channels he is involved in by:

node paymentChannels.js --list --config=<config file>

Info

If you further want to support this work, donations (especially in WRT) are welcome to: 3PK2MrcuSKwP6QTc8XQR9g1PCjqFwiNxzW3.