SaTC: CORE: Small: Layer 2 Channels

About This Grant

As blockchains continue to grow, in terms of number of users and applications that rely on blockchains, current blockchains are unable to sustain the increasing demand and usage. The consequences are reflected in very low transaction throughput of cryptocurrencies and other applications that are built on the blockchain. This has accentuated the need for scaling solutions that can help increase transaction throughput, and support a large number of users and diverse applications built on blockchains. Layer 2 is a set of off-chain transaction processing mechanisms that help scale blockchains in a modular way. A prominent Layer 2 mechanism is a payment channel network (PCN), where several thousands of financial transactions can be processed with minimal blockchain read/writes, and with no changes required to the blockchain's underlying consensus mechanism. This project’s novelties are in solving fundamental research challenges in payment channel networks and designing novel cryptographic protocols of independent interest. The project’s broader significance and importance are in training students in critical cybersecurity topics such as applied cryptography and secure decentralized finance. This project’s objectives are: 1) Address fundamental research challenges in payment channel networks. 2) Build payment channel network protocols that are cross-chain compatible and blockchain-agnostic. 3) Build state channels that help execute arbitrary code off-chain. For achieving these objectives, the project uses cryptographic protocols and trusted execution environments. Specifically, this project contributes to advancing the state of the art in Layer 2 protocols in four areas: 1) It builds secure, decentralized, blockchain-agnostic authentication protocols in decentralized PCNs and investigates ways to prevent path inflation in decentralized off-chain PCNs, thus solving two foundational pervasive research challenges in PCNs. 2) It explores the design of secure, versatile, and efficient off-chain tumblers or off-chain coin mixers. 3) It builds upon payment channels to build secure and robust multi-user, decentralized state channels, which can enable users to execute multi-user smart contracts in a completely off-chain way. 4) It designs novel cryptographic protocols of independent interest. This award reflects NSF's statutory mission and has been deemed worthy of support through evaluation using the Foundation's intellectual merit and broader impacts review criteria.