Developing Payment Channels on the Algorand Blockchain

Blockchain technologies have emerged as secure and decentralized solutions to achieve consensus between mutual distrustful parties. However, after a recent widespread adoption in several domains, some serious scalability issues arised, causing low throughput and high transaction fees. Payment channel networks allow off-chain payments relying on the blockchain for channel opening and closure only. This allows to execute fast and cheap off-chain transactions without compromising security. Even if the most important example of a channel network is the Bitcoin’s Lightning Network, other more scalable blockchains could benefit from similar solutions to decrease the load on the main chain. In this paper, we propose a design and an implementation of a payment channel system based on the Algorand blockchain. A set of experimental evaluations show that a small number of off-chain transactions is sufficient to achieve better performance, both in term of cost and execution time, compared to the solution that executes all transactions on-chain.