Sprites: Payment Channels that Go Faster than Lightning

It is well known that Bitcoin, Ethereum, and other blockchain-based cryptocurrencies are facing hurdles in scaling to meet user demand. One of the most promising approaches is to form a network of “off-chain payment channels,” which are backed by on-chain currency but support rapid, optimistic transactions and use the blockchain only in case of disputes. We develop a novel construction for payment channels that reduces the worst-case “collateral cost” for offchain payments. In existing proposals, particularly the Lightning Network, a payment across a path of ` channels requires locking up collateral for O(`∆) time, where ∆ is the time to commit a on-chain transaction. Our construction reduces this cost to O(`+∆). We formalize our construction in the simulation-based security model, and provide an implementation as an Ethereum smart contract. Our construction relies on a general purpose primitive called a “state channel,” which is of independent interest.