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Application and evaluation of payment channel in hybrid decentralized Ethereum token exchange

University of British Columbia

As the killer decentralized application hosted by blockchain, cryptocurrencies have been accepted as digital cash by many investors and consumers nowadays. Token is a special kind of cryptocurrencies hosted on a blockchain. Due to the popularity of Ethereum, many token exchange platforms are for Ethereum based tokens nowadays. In general, we classify current token exchange supporting exchange of Ethereum based tokens into three categories, i.e., centralized token exchange (CEX), decentralized token exchange (DEX), and hybrid decentralized token exchange (HEX). CEX has been suffering from hacking due to the centralized management of users' tokens. In contrast, DEX maintains users' assets by smart contracts in a decentralized manner, but introduces additional overhead in terms of monetary and waiting time ( i.e., gas fee and transaction confirmation latency). HEX has been proposed to combine the benefits of CEX and DEX. However, existing HEX is criticized for two issues. First, trading transactions are time-consuming and expensive for frequent token traders. Second, excessive simultaneous transactions might cause the transaction congestion in Ethereum. In this thesis, we propose a payment channel based HEX, which extends existing solutions by adding a new payment channel layer to benefit frequent traders and alleviate the potential transaction congestion. We represent the system architecture of the proposed HEX and compare it with the conventional HEX to show how payment channel helps in decreasing the number of on-chain transactions for frequent traders. Besides, we propose the very first gas-price vs. transaction-confirmation-latency function to guide Ethereum transaction issuers to determine an optimal gas price that minimizes the overall cost. Based on the proposed gas-price vs. transaction-confirmation-latency function, we quantitatively evaluate the performance of payment channel in HEX by comparisons of the cost in terms of gas fee and transaction confirmation latency for a user in the conventional HEX and the proposed payment channel based HEX when the user's overall cost is minimized. Simulation results demonstrate the effectiveness of our proposed mechanism in terms of reducing gas fee and transaction confirmation latency for frequent traders as well as the potential transaction congestion in Ethereum.

Text

2019-10-24

Attribution-NonCommercial-NoDerivatives 4.0 International

http://hdl.handle.net/2429/72046

Electrical and Computer Engineering

University of British Columbia

UBCV

http://creativecommons.org/licenses/by-nc-nd/4.0/