Max-min Hub Pricing in Payment Channel Networks

Abstract

Payment Channel Networks (PCNs) offer an efficient off-chain alternative to the blockchain for transactions. Router nodes in PCNs facilitate transactions between non-adjacent nodes in exchange for a fee. PCN topology tends to be centralized, with a select number of routers known as hubs dominating all payment services. The fee-setting choices of hubs in order to maximize their revenue present fertile grounds for the study of PCN communications and economics. In this paper, we conduct a comprehensive analysis of the Hub Price-Setting (HPS) game. In particular, we define approximate Best Response strategies (ϵ-BR) as well as approximate Nash equilibria (ϵ-NE). We prove that for any ϵ > 0, an ϵ-BR always exists, and can be computed in polynomial time. We also prove that for some ϵ > 0, an ϵ-NE may not exist. We furthermore introduce the notion of conservative estimate and present a max-min approach to the HPS game. Extensive evaluation results demonstrate the power of our proposed approach.

Xuanli Lin

PhD in Computer Science

My research interests include network optimization, network security, artificial intelligence, and the Internet of Things.