Daric: a storage efficient payment channel with punishment mechanism

Arash Mirzaei, Amin Sakzad, Jiangshan Yu, Ron Steinfeld

Research output: Chapter in Book/Report/Conference proceedingConference PaperResearchpeer-review


Lightning Network (LN), the most widely deployed payment channel for Bitcoin, requires channel parties to generate and store distinct revocation keys for all n payments of a channel to resolve fraudulent channel closures. To reduce the required storage in a payment channel, eltoo introduces a new signature type for Bitcoin to enable payment versioning. This allows a channel party to revoke all old payments by using a payment with a higher version number, reducing the storage complexity from O(n) to O(1 ). However, eltoo fails to achieve bounded closure, enabling a dishonest channel party to significantly delay the channel closure process. Eltoo also lacks a punishment mechanism, which may incentivize profit-driven channel parties to close a payment channel with an old state, to their own advantage. This paper introduces Daric, a payment channel with unlimited lifetime for Bitcoin that achieves optimal storage and bounded closure. Moreover, Daric implements a punishment mechanism and simultaneously avoids the methods other schemes commonly use to enable punishment: 1) state duplication which leads to exponential increase in the number of transactions with the number of applications on top of each other or 2) dedicated design of adaptor signatures which introduces compatibility issues with BLS or most post-quantum resistant digital signatures. We also formalise Daric and prove its security in the Universal Composability model.

Original languageEnglish
Title of host publicationInformation Security - 25th International Conference, ISC 2022 Bali, Indonesia, December 18–22, 2022 Proceedings
EditorsWilly Susilo, Xiaofeng Chen, Fuchun Guo, Yudi Zhang, Rolly Intan
Place of PublicationCham Switzerland
Number of pages21
ISBN (Electronic)9783031223907
ISBN (Print)9783031223891
Publication statusPublished - 2022
EventInformation Security Conference 2022 - Bali, Indonesia
Duration: 18 Dec 202222 Dec 2022
Conference number: 25th
https://link.springer.com/book/10.1007/978-3-031-22390-7 (Proceedings)
https://isc2022.petra.ac.id/ (Website)

Publication series

NameLecture Notes in Computer Science
ISSN (Print)0302-9743
ISSN (Electronic)1611-3349


ConferenceInformation Security Conference 2022
Abbreviated titleISC 2022
Internet address


  • Bitcoin
  • Lightning network
  • Payment channel
  • Scalability
  • Watchtower

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