Optimizing virtual payment channel establishment in the face of on-path adversaries
Lukas Aumayr, Esra Ceylan, Yannik Kopyciok, Matteo Maffei, Pedro Moreno-Sánchez, Iosif Salem, Stefan Schmid · Computer Communications · 2025
Payment channel networks (PCNs) are among the most promising solutions to the scalability issues in permissionless blockchains , allowing parties to pay each other off-chain through a path of payment channels (PCs). However, the cost of routing transactions is proportional to the number of intermediaries since each charges a fee. Analogous to other networks, malicious intermediaries on the path can lead to security/privacy threats. Virtual channels (VCs), i.e., bridges over PC paths, mitigate the above PCN issues: Intermediaries participate only in the VC setup but in no future VC payments. However, creating a VC has a cost that must be paid out of the bridged PCs’ balance. Currently, we are missing guidelines on how/where to set up VCs. Ideally, VCs should minimize transaction costs while mitigating security and privacy threats from on-path adversaries. In this work, we address for the first time the VC setup problem, formalizing it as an optimization problem . We present an integer linear program (ILP) computing the globally optimal VC setup strategy in terms of cost, security, and privacy. We accompany this expensive ILP with a fast, greedy algorithm . Our model and algorithms can be used with any on-path adversary whose strategy can be expressed as a set of corrupted nodes. We evaluate the greedy algorithm over a snapshot of the Lightning Network (LN), the largest Bitcoin-based PCN. Our results confirm that the greedy strategy minimizes costs while protecting against security and privacy threats and may serve the LN community as guidelines for VC deployment.