Sprites and State Channels: Payment Networks that Go Faster Than Lightning

Bitcoin, Ethereum and other blockchain-based cryptocurrencies, as deployed today, cannot support more than several transactions per second. Off-chain payment channels, a “layer 2” solution, are a leading approach for cryptocurrency scaling. They enable two mutually distrustful parties to rapidly send payments between each other and can be linked together to form a payment network, such that payments between any two parties can be routed through the network along a path that connects them. We propose a novel payment channel protocol, called Sprites. The main advantage of Sprites compared with earlier protocols is a reduced “collateral cost,” meaning the amount of money time that must be locked up before disputes are settled. In the Lightning Network and Raiden, a payment across a path of channels requires locking up collateral for time, where is the time to commit an on-chain transaction; every additional node on the path forces an increase in lock time. The Sprites construction provides a constant lock time, reducing the overall collateral cost to Our presentation of the Sprites protocol is also modular, making use of a generic state channel abstraction. Finally, Sprites improves on prior payment channel constructions by supporting partial withdrawals and deposits without any on-chain transactions.