Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2...
Transcript of Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2...
![Page 2: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/2.jpg)
What Statechains Achieve
![Page 3: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/3.jpg)
What Statechains Achieve
- L2 scaling by avoiding on-chain transactions
![Page 4: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/4.jpg)
What Statechains Achieve
- L2 scaling by avoiding on-chain transactions
- Advantage over Lightning:
unrestricted coin movement (has synergy)
![Page 5: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/5.jpg)
What Statechains Achieve
- L2 scaling by avoiding on-chain transactions
- Advantage over Lightning:
unrestricted coin movement (has synergy)
- Advantage over Federated Sidechains:
federation doesn’t have full control
![Page 6: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/6.jpg)
What Statechains Achieve
- L2 scaling by avoiding on-chain transactions
- Advantage over Lightning:
unrestricted coin movement (has synergy)
- Advantage over Federated Sidechains:
federation doesn’t have full control
- Unique limitation: can only move full UTXO amount
![Page 7: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/7.jpg)
What Statechains Build On
- Schnorr signatures
- Adaptor signatures
- Eltoo
- Graftroot
![Page 8: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/8.jpg)
What Statechains Build On
- Schnorr signatures
- Adaptor signatures
- Eltoo
- Graftroot
Works on any cryptocurrency that supports the above
![Page 9: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/9.jpg)
High-level Overview AB1 BTC
AC
AD
![Page 10: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/10.jpg)
High-level Overview
- Change UTXO ownership off-chainAB1 BTC
AC
AD
![Page 11: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/11.jpg)
High-level Overview
- Change UTXO ownership off-chain
- Guaranteed on-chain redemption (D)
AB1 BTC
AC
AD
![Page 12: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/12.jpg)
High-level Overview
- Change UTXO ownership off-chain
- Guaranteed on-chain redemption (D)
- Facilitated by “statechain entity” (A)
AB1 BTC
AC
AD
![Page 13: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/13.jpg)
High-level Overview
- Change UTXO ownership off-chain
- Guaranteed on-chain redemption (D)
- Facilitated by “statechain entity” (A)
- A can collude with prior owners (B, C)
AB1 BTC
AC
AD
![Page 14: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/14.jpg)
High-level Overview
- Change UTXO ownership off-chain
- Guaranteed on-chain redemption (D)
- Facilitated by “statechain entity” (A)
- A can collude with prior owners (B, C)
- Collusion/cheating always provable
AB1 BTC
AC
AD
![Page 15: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/15.jpg)
Bob locks up 1 BTC with Alice...
ABB
in out
on-chain
![Page 16: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/16.jpg)
Bob locks up 1 BTC with Alice...
ABB
in out
on-chain
…but who owns it?
![Page 17: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/17.jpg)
Bob owns it
ABB
in out
BAB
in out
on-chain off-chain
![Page 18: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/18.jpg)
Bob owns it
ABB
in out
BAB
in out
on-chain off-chain
eltoo: AB orB in 5 days
![Page 19: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/19.jpg)
Can Bob transfer this off-chain to Carol?
ABB
in out
BAB
in out
on-chain off-chain
![Page 20: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/20.jpg)
Can Bob transfer this off-chain to Carol?Sort of, but Carol has no control over it
ABB
in out
CAB
in out
on-chain off-chain
![Page 21: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/21.jpg)
So Bob uses a transitory key X instead
AXB
in out
BAX
in out
on-chain off-chain
![Page 22: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/22.jpg)
So Bob uses a transitory key X insteadand passes the key on to Carol
AXB
in out
CAX
in out
on-chain off-chain
![Page 23: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/23.jpg)
The role of the statechain entity (A)
![Page 24: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/24.jpg)
The role of the statechain entity (A)
- Promises to only cooperate with the last owner
![Page 25: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/25.jpg)
The role of the statechain entity (A)
- Promises to only cooperate with the last owner
- Can be a federation Schnorr: A1+A2+A3=A
![Page 26: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/26.jpg)
The role of the statechain entity (A)
- Promises to only cooperate with the last owner
- Can be a federation
- Updates the statechain:
- listing all UTXOs it controls (no duplicates)
- every transfer has a signature (e.g. B to C)
Schnorr: A1+A2+A3=A
![Page 27: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/27.jpg)
AXB
Bitcoin
1 BTC
![Page 28: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/28.jpg)
AXB
BAX
Bitcoin
1 BTC
![Page 29: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/29.jpg)
Statechain
X1 BTC
AXB
BAX
Bitcoin
1 BTC
![Page 30: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/30.jpg)
Statechain
X1 BTC
B
AXB
BAX
Bitcoin
1 BTC
![Page 31: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/31.jpg)
Statechain
X1 BTC
B
C
AXB
BAX
CAX
Bitcoin
1 BTC
![Page 32: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/32.jpg)
Statechain
X1 BTC
B
C
AXB
BAX
CAX
Bitcoin
1 BTC
eltoo
![Page 33: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/33.jpg)
X1 BTC
B
AXB
BAX
Problem: who goes first?
1 BTC
![Page 34: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/34.jpg)
X1 BTC
B
AXB
BAX
CAX
Statechain entity A goes first…?
1 BTC
![Page 35: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/35.jpg)
X1 BTC
B
C
AXB
BAX
User B goes first…?
1 BTC
![Page 36: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/36.jpg)
X1 BTC
B
AXB
BAX
Solution: Adaptor Signatures
1 BTC
![Page 37: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/37.jpg)
X1 BTC
B
C
AXB
BAX
Everyone shares an incomplete signature
1 BTC
CAX
![Page 38: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/38.jpg)
X1 BTC
B
C
AXB
BAX
Completing the statechain signature...
1 BTC
CAX
![Page 39: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/39.jpg)
X1 BTC
B
C
AXB
BAX
...automatically completes the bitcoin signature
1 BTC
CAX
![Page 40: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/40.jpg)
Security Model
Bitcoin: A + XStatechain: B / C / D / E (knows X)Owner: Prev. Last
![Page 41: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/41.jpg)
Security Model
- Moving the coins always requires the permission of:
a. Statechain entity A (typically a federation)
b. a transitory key holder (who held the UTXO)
Bitcoin: A + XStatechain: B / C / D / E (knows X)Owner: Prev. Last
![Page 42: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/42.jpg)
Security Model
- Moving the coins always requires the permission of:
a. Statechain entity A (typically a federation)
b. a transitory key holder (who held the UTXO)
- Entity must cooperate with LAST transitory key holder
Bitcoin: A + XStatechain: B / C / D / E (knows X)Owner: Prev. Last
![Page 43: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/43.jpg)
Security Model
- Moving the coins always requires the permission of:
a. Statechain entity A (typically a federation)
b. a transitory key holder (who held the UTXO)
- Entity must cooperate with LAST transitory key holder
- Failure to do so will produce evidence of fraud
Bitcoin: A + XStatechain: B / C / D / E (knows X)Owner: Prev. Last
![Page 44: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/44.jpg)
Worst case scenario
![Page 45: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/45.jpg)
Worst case scenario
- Entity obtains a bunch of transitory keys (X, Y, Z…)
![Page 46: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/46.jpg)
Worst case scenario
- Entity obtains a bunch of transitory keys (X, Y, Z…)
- Proceeds to (provably) steal the coins
![Page 47: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/47.jpg)
Worst case scenario
- Entity obtains a bunch of transitory keys (X, Y, Z…)
- Proceeds to (provably) steal the coins
- Uncompromised transitory keys withdraw on-chain
![Page 48: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/48.jpg)
Worst case scenario
- Entity obtains a bunch of transitory keys (X, Y, Z…)
- Proceeds to (provably) steal the coins
- Uncompromised transitory keys withdraw on-chain
Harmless without transitory keys (weak assumption):
- The statechain entity gets hacked
![Page 49: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/49.jpg)
Worst case scenario
- Entity obtains a bunch of transitory keys (X, Y, Z…)
- Proceeds to (provably) steal the coins
- Uncompromised transitory keys withdraw on-chain
Harmless without transitory keys (weak assumption):
- The statechain entity gets hacked
- Court order to freeze/confiscate coins
![Page 50: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/50.jpg)
Z2 BTC
C
Swapping to smaller amounts
Y1 BTC
B
X1 BTC
B
![Page 51: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/51.jpg)
Z2 BTC
C
B
Swapping to smaller amounts
Y1 BTC
B
C
X1 BTC
B
C
![Page 52: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/52.jpg)
Z200 LTC
C
B
Possible with other coins
Y1 BTC
B
C
X1 BTC
B
C
![Page 53: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/53.jpg)
Microtransactions
“Anything smaller than an economically viable UTXO”
![Page 54: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/54.jpg)
Microtransactions
“Anything smaller than an economically viable UTXO”
- Required if Statechain entity wants to charge fees
![Page 55: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/55.jpg)
Microtransactions
“Anything smaller than an economically viable UTXO”
- Required if Statechain entity wants to charge fees
- Needed when swapping between multiple currencies
![Page 56: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/56.jpg)
Microtransactions
“Anything smaller than an economically viable UTXO”
- Required if Statechain entity wants to charge fees
- Needed when swapping between multiple currencies
- Ideally solved without trusting the statechain entity
(important legal reason: no custody over ANY coins)
![Page 57: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/57.jpg)
X1 BTC
B
AXB
BAX
Lightning Channel Creation
1 BTC
![Page 58: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/58.jpg)
X1 BTC
B
BC
AXB
BAX
BCAX
Lightning Channel Creation
1 BTC
![Page 59: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/59.jpg)
X1 BTC
B
BC
AXB
BAX
BCAX
Lightning Channel Creation
1 BTC
BBC
C
0.9 BTC
0.1 BTC
![Page 60: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/60.jpg)
Lightning on Statechains
![Page 61: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/61.jpg)
Lightning on Statechains
- Channel updated together with multi atomic swap
![Page 62: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/62.jpg)
Lightning on Statechains
- Channel updated together with multi atomic swap
- Small channels: up to the amount of the smallest UTXO
![Page 63: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/63.jpg)
Lightning on Statechains
- Channel updated together with multi atomic swap
- Small channels: up to the amount of the smallest UTXO
- Uncooperative close similar to regular Eltoo
![Page 64: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/64.jpg)
Lightning on Statechains
- Channel updated together with multi atomic swap
- Small channels: up to the amount of the smallest UTXO
- Uncooperative close similar to regular Eltoo
- Close/reopen channel low-friction: it’s all off-chain!
(e.g. adding/removing bitcoins)
![Page 65: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/65.jpg)
Potential Use Cases
![Page 66: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/66.jpg)
Potential Use Cases
- Off-chain value transfer
![Page 67: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/67.jpg)
Potential Use Cases
- Off-chain value transfer
- Platform for Lightning channels
![Page 68: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/68.jpg)
Potential Use Cases
- Off-chain value transfer
- Platform for Lightning channels
- Betting channels (multisig, Discreet Log Contracts)
![Page 69: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/69.jpg)
Potential Use Cases
- Off-chain value transfer
- Platform for Lightning channels
- Betting channels (multisig, Discreet Log Contracts)
- Fork-agnostic ETF (UTXOs don’t move)
![Page 70: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/70.jpg)
Further topics
![Page 71: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/71.jpg)
Further topics
- Non-interactive version
![Page 72: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/72.jpg)
Further topics
- Non-interactive version
- Use HSM to transfer transitory key (attestation)
![Page 73: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/73.jpg)
Further topics
- Non-interactive version
- Use HSM to transfer transitory key (attestation)
- Graftroot withdrawal (allows redeeming forks)
![Page 74: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/74.jpg)
Further topics
- Non-interactive version
- Use HSM to transfer transitory key (attestation)
- Graftroot withdrawal (allows redeeming forks)
- Succinctly store and relay statechain (per UTXO)
![Page 75: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/75.jpg)
Further topics
- Non-interactive version
- Use HSM to transfer transitory key (attestation)
- Graftroot withdrawal (allows redeeming forks)
- Succinctly store and relay statechain (per UTXO)
- Variant using blind signatures:
Entity unaware which UTXOs it holds (unblind p2p)
![Page 79: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/79.jpg)
AXB
AX orB*AX
AX
Bitcoin
on-chain state
prior state
new state
AX orC*
*timelock
![Page 80: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/80.jpg)
AXB
AX orB*AX
AX
Bitcoin
on-chain state
prior state
new state
AX orC*
*timelock
Statechain
B
C
“AX”
last owner
![Page 81: Statechains: Off-chain Transfer of UTXO Ownership · 2019. 4. 28. · What Statechains Achieve - L2 scaling by avoiding on-chain transactions - Advantage over Lightning: unrestricted](https://reader033.fdocuments.net/reader033/viewer/2022052521/60a6b62cb64fca3c4b7ad89e/html5/thumbnails/81.jpg)
AXB
AX orB*AX
AX
on-chain state
prior state
new state
AX orBC*
*timelock
BBC
C
0.9 BTC
0.1 BTC
1 BTC
Lightning