Fail-safe Watchtowers and Short-lived Assertions for Payment Channels
This addresses scalability and security issues for users of blockchain payment channels, offering a more efficient and robust solution, though it appears incremental in improving existing watchtower designs.
The paper tackles security and efficiency drawbacks in existing watchtower schemes for blockchain payment channels by proposing fail-safe watchtowers that send periodic on-chain messages instead of constant monitoring, and introduces short-lived assertions to mitigate misbehavior in economically unjustified scenarios.
The recent development of payment channels and their extensions (e.g., state channels) provides a promising scalability solution for blockchains which allows untrusting parties to transact off-chain and resolve potential disputes via on-chain smart contracts. To protect participants who have no constant access to the blockchain, a watching service named as watchtower is proposed -- a third-party entity obligated to monitor channel states (on behalf of the participants) and correct them on-chain if necessary. Unfortunately, currently proposed watchtower schemes suffer from multiple security and efficiency drawbacks. In this paper, we explore the design space behind watchtowers. We propose a novel watching service named as fail-safe watchtowers. In contrast to prior proposed watching services, our fail-safe watchtower does not watch on-chain smart contracts constantly. Instead, it only sends a single on-chain message periodically confirming or denying the final states of channels being closed. Our watchtowers can easily handle a large number of channels, are privacy-preserving, and fail-safe tolerating multiple attack vectors. Furthermore, we show that watchtowers (in general) may be an option economically unjustified for multiple payment scenarios and we introduce a simple, yet powerful concept of short-lived assertions which can mitigate misbehaving parties in these scenarios.