Timeout Trees: A Solution To Scaling Lightning Network LSPs

One of the biggest inherent limitations to the Lightning Network is the constricted fig of channels that tin beryllium opened oregon closed per artifact fixed the blocksize limit. Regardless of however galore transactions tin hap off-chain however cheaply, this is simply a cardinal bottleneck restricting however galore radical could really realistically usage the Lightning Network. Even the Lightning Network whitepaper went done successful the decision that successful a script wherever the full world's colonisation of 7 cardinal was utilizing Lightning, with lone 2 on-chain transactions a twelvemonth per person, Bitcoin would necessitate 133 MB blocks for Lightning to work. This isn't immoderate retired of near tract problem, oregon unpredictable issue, it was a regulation of the protocol plan afloat understood from time one.

Part of the program to code this contented has ever been the thought of transmission factories, i.e. a benignant of transmission that much than 2 users participated in. This was ever the absorption things would person to spell successful bid to standard Lightning and Bitcoin without a blocksize increase, but the contented is that solving the occupation of on-chain footprints introduces a full big of different problems. First of all, thing cardinal changes astir the request to enforce intermediate states if a counterparty becomes non-responsive. This has implications for the value-add. The full constituent of a transmission mill is that, for example, 20 radical tin stock 1 UTXO and rearrange the liquidity wrong with the different 20 radical nevertheless they want. Once idiosyncratic closes retired on-chain non-cooperatively this starts to interfere with that goal.

If I adjacent retired my transmission wrong a transmission factory, I resistance a clump of radical with maine retired of the factory. Think of a mill similar a merkle tree, there's 1 UTXO astatine the top, and that splits successful fractional off-chain, and those divided successful half, etc. until we get to everyone's idiosyncratic channels. Once I peel my transmission retired of the factory, everyone connected my broadside of each divided that goes on-chain is present chopped disconnected from everyone other successful the factory. They tin nary longer reorganize their liquidity into that portion of the radical if everyone cooperates.

Another large contented is that adjacent to commencement 1 you request to person everyone online astatine the opening to pre-sign each the transactions. If you privation 20 radical successful a factory, everyone needs to beryllium online to commencement it. If you privation a 1000 people, a 1000 radical request to beryllium online, etc.

This makes transmission factories a large plan abstraction afloat of tons of problems to solve. So we lick an existing occupation for Lightning, but marque a clump of caller ones. Sounds similar engineering to me.

Timeout Trees

John Law's caller proposal, Timeout Trees, attempts to connection a solution to the 1 halfway contented of transmission factories. I wouldn't rather telephone a timeout histrion a transmission factory, much of a "proto-factory," but it offers a imaginable solution to the contented of opening and closing monolithic amounts of channels without introducing the occupation of non-cooperative closes ruining the usage of the mill for different users. It requires CHECKTEMPLATEVERIFY (CTV) and a Lighting Service Provider (LSP) successful bid to enactment functionally.

A Timeout Tree is fundamentally a transmission mill guaranteed by covenants, with nary quality to alteration however the liquidity is reorganized off-chain aft it is made, with a peculiar flight clause. An LSP, we'll telephone them Bob, plays the relation of bridging casual users into the wider Lightning Network. Bob tin instrumentality coins helium controls and make a CTV histrion that creates a azygous UTXO unfurling to unfastened channels to immoderate arbitrary fig of users of his LSP service. The bully happening astir CTV is it enables this to beryllium done without everyone being online astatine the aforesaid time. Bob tin simply get everyone to motion their archetypal transmission authorities 1 astatine a clip and clasp onto them until everyone has acceptable up the channel, and conscionable walk the funds into the CTV histrion erstwhile helium has channels acceptable up with each user.

This addresses the occupation of everyone having to beryllium online astatine the aforesaid clip successful bid to acceptable up the "factory" and commencement utilizing Lightning. Because of CTV, erstwhile Bob spends coins into the histrion mounting up everyone's Lightning channels, determination is nary mode for him to backmost retired and instrumentality the coins (yet). With that archetypal UTXO successful the CTV confirmed on-chain, everyone tin dainty their channels arsenic unfastened and determination is nary hazard of them being doublespent.

Now the past part, closing the channels. Even though opening them lone requires a azygous UTXO on-chain due to the fact that of CTV, closing them inactive would necessitate the full CTV histrion to unfurl on-chain truthful everyone tin taxable their transmission states, right? Wrong. This is the Timeout portion of Timeout Trees. Every subdivision successful the Timeout Tree has a publication subdivision wherever Bob tin expanse each of the funds aft a timelock.

A diagram of a Timeout Tree.

Now I'm definite you're reasoning "what!?" This is the existent genius of however this connection works. Because Bob tin expanse the on-chain UTXOs himself without anyone other aft the timelock, these channels each person an expiration day unless users really unfurl the full histrion and corroborate the existent transmission backing on-chain. This allows Bob to bash thing neat: erstwhile that timelock is coming up, helium tin unfastened a marque caller Timeout Tree with each the users of the existent one, and person them determination each of their funds from the expiring histrion into the caller 1 wholly off-chain connected Lightning and past expanse the azygous on-chain UTXO of the past tree.

This allows for businesslike closing of each these channels on-chain. The lone occupation near present is enforcing an HTLC on-chain if the different enactment stops cooperating. Well…that isn't truly an contented successful this case, oregon alternatively it's an each oregon thing issue. The crushed channels person to beryllium closed to enforce an HTLC is if the different enactment of the transmission stops responding successful the mediate of routing it. In a Timeout Tree each azygous user's counterpart is Bob. So if Bob, arsenic agelong arsenic helium is being honest, is not responding to update a failed oregon palmy HTLC for 1 user, he's not responding for immoderate different idiosyncratic either. In that lawsuit everyone tin inactive adjacent retired their channels on-chain earlier the timeout and halt utilizing Bob's LSP.

Wrapping Up

Users volition inactive person to wage fees for on-chain interactions, determination is nary mode astir that, and an full Timeout Tree closing retired on-chain non-cooperatively would beryllium a ample and costly on-chain footprint, but this is yet an contented immoderate multiparty transmission strategy volition person to address. Timeout Trees nevertheless does person compelling solutions to the cooperative lawsuit of some opening and closing a monolithic multiparty transmission without degrading the spot exemplary of the strategy to thing custodial.

John has adjacent successful his astir caller mentation of the insubstantial projected a strategy wherever users could beryllium penalized for non-cooperative closures capable to screen Bob's outgo for yet sweeping a clump of fragmented histrion UTXOs aft the timeout. Potentially determination are ways to bash the reverse if Bob's inactivity oregon dishonesty is the origin for users having to non-cooperatively adjacent their portion of the tree.

At the extremity of the time though, this is simply a precise factual and circumstantial connection for a transmission mill plan that really attempts to code the existent issues of usage and implementation alternatively of a half-defined and vague concept. That is monolithic advancement successful presumption of addressing Lightning's semipermanent scaling limitations.