Building Scalable Decentralized Payment Systems

Abstract: Increasing the transactional throughput of decentralized blockchains in a secure manner has been the holy grail of blockchain research for most of the past decade. This paper introduces a scheme for scaling blockchains while retaining virtually identical security and decentralization, colloquially known as optimistic rollup. We propose a layer-2 scaling technique using a permissionless side chain with merged consensus. The side chain only supports functionality to transact UTXOs and transfer funds to and from a parent chain in a trust-minimized manner. Optimized implementation and engineering of client code, along with improvements to block propagation efficiency versus currently deployed systems, allow use of this side chain to scale well beyond the capacities exhibited by contemporary blockchains without undue resource demands on full nodes.