PayGo: Incentive-Comparable Payment Routing Based on Contract Theory

Abstract

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 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. © 2020 IEEE.