- Conference Paper
Payment channels were introduced to solve various eminent cryptocurrency scalability issues. Multiple payment channels build a network on top of a blockchain, the so-called layer 2. In this work, we analyze payment networks through the lens of network creation games. We identify betweenness and closeness centrality as central concepts regarding payment networks. We study the topologies that emerge when players act selfishly and determine the parameter space in which they constitute a Nash equilibrium. Moreover, we determine the social optima depending on the correlation of betweenness and closeness centrality. When possible, we bound the price of anarchy. We also briefly discuss the price of stability. Show more
Book titleFinancial Cryptography and Data Security
Journal / seriesLecture Notes in Computer Science
Pages / Article No.
SubjectBlockchain; Creation game; Layer 2; Nash equilibrium; Network design; Payment channels; Price of anarchy; Price of stability
Organisational unit03604 - Wattenhofer, Roger / Wattenhofer, Roger
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