Chaumian Ecash Tokens to Mitigate Channel Jamming on Lightning Network

• Channel jamming is a problem with the Lightning Network that can cause nodes to lose money while their liquidity is locked up.
• Last month, Lightning developer Antoine Riard proposed a formal protocol that utilizes Chaumian ecash tokens to mitigate channel jamming.
• This protocol would use anonymized credentials to build a sort of reputation scoring system for users routing payments through nodes without having to dox or associate that reputation with a static identifier.

Channel jamming is a major issue on the Lightning Network that has the potential to do serious damage to its users. Channel jamming occurs when an attacker is able to route a payment through other nodes from themselves to themselves, and then refuse to finalize the payment. This makes that liquidity useless for forwarding other payments until the hashed timelock contract (HTLC) timelock expires and the payment refunds. Last month, Lightning developer Antoine Riard proposed a formal protocol to mitigate this problem.

Riard and Gleb Naumenko published a paper in August exploring different solutions for mitigating channel jamming. One of the proposed solutions was a form of anonymized credentials that nodes could use to build a sort of reputation scoring system for users routing payments through them without having to dox or associate that reputation with a static identifier that would negatively impact peoples‘ privacy. This solution has now become the formal protocol proposal made by Riard last month.

The protocol proposed by Riard utilizes Chaumian ecash tokens. These tokens are centralized tokens issued by a mint authority in a way that prevents the issuance of a token from being correlated to the redemption of a token later. This is done by signing a token in a blinded way, allowing the receiver of the token to unblind it without invalidating the signature. The issuer can then verify it is a valid token without seeing who issued it.

The proposed protocol would allow nodes to issue these tokens to route payments through them. Nodes could then issue different types of tokens that would give users discounts for routing payments through them. This would create competition between nodes, as nodes that offer the most attractive discounts would be most likely to receive the most payments routed through them.

In addition to creating competition between nodes, the protocol would also create a reputation system for users. When a user receives a token from a node, they can use the token to prove that they paid the node a fee, or that they received a fee from a node. This would allow nodes to track the amount of money a user has routed through them, and can be used to allow nodes to blacklist users that are attempting to jam channels.

Overall, the proposed protocol would allow nodes to track users’ payments and create a reputation system without exposing users to privacy risks. This would allow nodes to prevent channel jamming and protect their liquidity while still allowing users to remain anonymous. The protocol is still in the early stages of development, and more research is needed before it can be fully implemented. However, if the protocol is successful, it could provide a much-needed solution to a major problem on the Lightning Network.