payGo: Incentive-comparable Payment Routing Based on Contract Theory

Kyungho Ryu, Wooseong Kim, Eun-Kyu Lee
2020 IEEE Access  
The increasing use of cryptocurrencies has raised scalability and performance issues in blockchain systems that require global consensus and security assurance for real-time payments. The payment channel network (PCN) is a promising off-chain solution for cryptocurrencies; in these networks, transactions are offloaded from the blockchain and are handled directly using a payment channel with minimum involvement of the blockchain. Routing protocols for PCNs are critical for finding a path-based
more » ... ding a path-based transaction (PBT) path with low latency and high throughput, and several routing protocols have been proposed to address decentralization, concurrency, and privacy issues. However, incentive mechanisms for the payment service provider (PSP), which are critical for successful path-based transactions, have not been sufficiently studied. Previous routing protocols are proposed only to find a best path in the given budget. In this study, we propose the payGo routing protocol, which not only discovers a feasible path but also derives the optimal incentive for the PSP using contract theory. Furthermore, payGo induces the PSP to make a contract with a counterparty to guarantee payment latency and throughput with a penalty. We implement the payGo protocol by extending the Raiden network and evaluate its performance on a testbed. The results indicate that, in comparison with the conventional linear pricing for latency, payGo can improve about 90% of payer's utility by optimizing latency and incentive. INDEX TERMS Blockchain, cryptocurrency, payment channel network, routing, contract theory, VANET, edge computing, vehicular fog. • This is the first study in which a contract mechanism is designed for a PBT service and is applied to a PBT routing protocol, called as payGo. • We apply contract theory to derive the optimal incentive, regarding PBT delay as a service quality, under asymmetric information between a payer and PSPs; moreover, we numerically analyze the proposed model. • We implement the payGo routing protocol in the Raiden network with smart contract codes and evaluate its performance in a PCN testbed. III. BACKGROUND In this section, we present a brief review of payment channels and PCNs. Subsequently, we explain detail procedures of a PBT in the PCN. 70096 VOLUME 8, 2020
doi:10.1109/access.2020.2986035 fatcat:aosoawadnfavrdl6jeyke5nizq