This will be Twilight, a network of private micropayments in Bitcoin and Ethereum

Bitcoin and Ethereum transaction flow with Twilight

A team of developers designed a concept that could compete with Bitcoin’s Lightning Network. In principle, it has the same functions, since it is about payment channels executed in a P2P network (from user to user). However, the programmers of this project assure that it is a more private second layer network.

Through a publication On Medium, four researchers from the Hebrew University of Jerusalem disclosed the workings of a network that resembles Bitcoin’s Lightning network, with privacy-focused variants.

The project, called the Twilight network, would function as a second layer network, for which its properties depend on the main network on which the payment channels will be created. In other words, the Twilight network would allow its users to have some usage capabilities in Bitcoin and some variants in Ethereum.

A specific attack and a specific solution

The research, led by doctoral student Maya Dotan, explains how a certain Lightning Network property could allow a security breach. Specifically, they refer to the ability of the Lightning network to allow funds to be retransmitted through various nodes, with which an attacker could “observe” the liquidity of users.

An attacker can open channels with every retransmission along the path between Alice and Bob. This allows an attacker to look for changes in channel liquidity by asking the relay to direct payments between their customers and to see if the relay rejects their payments for exceeding available liquidity. By investigating changes in liquidity through relay channels, an attacker can track payments between network users. These probes are also free, as the attacker never has to make the payments (he just waits to see if it can be run).

Maya Dotan, Saar Tochner, Aviv Zohar, and Yossi Gilad, researchers at the Hebrew University of Jerusalem.

To avoid this possibility, the Twilight network forces routers to add a minimal amount of “random noise to every query they receive.”. In addition, it allows for the possibility that “noise” can be tuned to specific retransmission values ​​through a mechanism called a “noise tree,” which offers more scalability as it is used more.

Bitcoin and Ethereum transaction flow with Twilight
Short transactions are usually more private (dashed black line). Once a transaction begins using routers, funds are likely to be monitored by network participants (solid black line). Source: Introducing Twilight: A Network of Private Payment Channels / Medium.

Let’s remember that Lightning payment channels, for example, allow direct payments between two users who agree to create a bitcoin (BTC) pool for their regular operations. This is something like a mutual security deposit.

However, depending on the availability of the channel participants or the liquidity they possess, other users operating Lightning nodes can serve to get a transaction from one point to another, such as pivots or liquidity routers.

Bitcoin Twilight Network Optimizations

According to the researchers, the Twilight network prioritizes short routes. That is, those payments that require fewer jumps to get from one account to another. This is because, by design, in both the Lightning and Twilight networks, short paths are more private while they are less public. Still, Twilight possesses the ability to add one more obstacle for potential attackers through random routing.

This is because the Twilight programmers anticipate that not all network participants will want to “add noise” to the transactions they route from one point to another, because this feature requires yet another security deposit.

Another factor that the Twilight network takes into account relates to the ability for nodes to query in trusted environments. This way they make sure that each relay actually adds noise when it processes a transaction.

This operation requires that each payment channel be associated with a “state” of the network. Something like a database, which includes the current balance divided between the pairs that open a channel.

Even with this feature, researchers claim that the Twilight network does not keep track of those states. They indicate that if any dishonest node or user were to learn of these states, he would have no chance of stealing funds from the payment channels he observes.

Nevertheless, it would be impossible to hide all the information of a transactionbecause eventually some nodes will need to know transaction details to resolve disputes.

Twilight doesn’t keep payments hidden forever, as a relay must be able to claim a resolved payment by posting a transaction on the blockchain with the payee’s secret in the event of a dispute.

Maya Dotan, Saar Tochner, Aviv Zohar, and Yossi Gilad, researchers at the Hebrew University of Jerusalem.

To have more control over the amount of each payment and redeem it when the parties involved agree to close a channel, the Twilight network runs on a mechanism similar to Bitcoin’s HTLC operationwhich in a certain way allows each member of the pair that opens a channel to know a secret without which they would not be able to prove that they are the owners of that channel.

“To support this additional functionality, Twilight must be implemented on top of a blockchain that supports smart contracts (such as Ethereum),” its developers say.

“Furthermore, to ensure privacy is maintained after a channel is closed, it is preferred to use protected transactions. However, this is not crucial, as channel closure only publishes the aggregate information of all payments made by the channel, which should not reveal mush for long-running channels.

Estimated costs when using the Twilight network

According to the researchers, “79 payments per day can cover your operating cost [de un nodo para Twilight] charging a fee of 1% of each payment».

This will be Twilight, a network of private micropayments in Bitcoin and Ethereum
According to the simulations, the failure rate of the Twilight payment channels is between 0.01% and 0.05%, depending on the amount of noise that the nodes implement. Source: Introducing Twilight: A Network of Private Payment Channels / Medium.

The researchers estimate that there is a small failure rate when running “noisy” channels, compared to “quiet” channels with the same capacity. This is due to noise added to improve the privacy of each transaction. They add that to obtain these results they carried out simulations.

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