PERUN: Virtual Payment Channels over Cryptographic Currencies

Payment channels emerged recently as an efficient method for performing cheap micropayment transactions in cryptographic currencies. In contrast to the traditional on-chain transactions, payment channels have the advantage that they allow nearly unlimited number of transactions between parties without involving the blockchain. In this work, we introduce Perun, a new system for payment and state channels over cryptographic currencies, that has several advantages over the existing proposals. In particular, Perun offers a new method for connecting channels that is more efficient than the existing technique of “routing transactions” over multiple channels. That is, in contrast to prominent existing solutions such as the Lightning Network, Perun does not require involvement of the intermediary over which payments are routed. To achieve this, Perun introduces a new technique that we call channel virtualization, which allows to build virtual payment channels over so-called multistate channels. Multistate channels are a new primitive that we introduce as an independent concept in this work and generalizes the notion of “state channels”. Our schemes can work over any cryptocurrency that provides Turing-complete smart contracts. As a proof of concept, we implemented Perun in Ethereum. ? Research supported by the Polish National Science Centre grant 2014/13/B/ST6/03540 and by the Emmy Noether Program FA 1320/1-1 of the German Research Foundation (DFG).