Profitable Fee Controller for Payment Channel Networks

Abstract

Payment channel networks (PCN) are one of the promising second layer solutions for the scalability issue of cryptocurrencies. They offer high throughput and low-cost transactions for the users. However, practical and design issues of PCN hinder users from embracing the technology. This paper focuses on how to increase user adoption by boosting revenue as transaction mediators. Our approach is twofold; reduce the cost of refilling channels due to channel exhaustion and collectively acquire a maximum gain from all channels belonging to the respective nodes. For that, we devise a novel fee controller based on Model Predictive Control (MPC), where we formulate the problem as an Optimal Control Problem (OCP). It is optimized to obtain maximum profit while proactively alarming the payers about the exhaustion through a dynamic fee mechanism. We evaluate the proposed fee controller’s effectiveness compared with the conventional static fee controller and OptimizedFee controller. Our experimental simulations demonstrate that the proposed fee controller successfully improves the revenue and controls channel exhaustion simultaneously.