International Association
for Cryptologic Research

A typical approach for scaling blockchains is to create bilateral, off-chain channels, known as payment/state channels, that can protect parties against cheating via on-chain collateralization. While such channels have been studied extensively, not much attention has been given to off-chain programmability, where the parties can agree to enforce arbitrary conditions over their payments without going on-chain. Such ability is especially important for scaling off-chain channels via the hub-and-spoke model, where each party establishes a channel with a highly available (but untrusted) hub without a priori knowledge about the type and conditions of its off-chain transactions.

We introduce the notion of a programmable payment channel (PPC) that allows two parties to agree on a smart contract off-chain specifying the conditions on which the transactions can happen. If either party violates any of the terms, the other party can later deploy the contract on-chain to receive a remedy as agreed upon in the contract. Specifically, our PPC supports programmable payments where only one party deposits to the agreed off-chain contract, enabling lightweight payments. We further show that any two-party contract (even ones with two party deposits) can be implemented with PPC, by a compiler and associated protocol, allowing the parties to use their pre-deposited on-chain collaterals for any off-chain interaction potentially not anticipated at the time of channel setup. We formalize and prove the security and correctness of our protocol under the UC framework. We implement our protocol on Ethereum using accumulators to achieve efficient concurrent programmable transactions and measure the gas overhead of a hash-time-lock PPC contract to be < 100K which can be amortized over many off-chain payments.