Abstract
Payment channel networks are cryptocurrency-era scaling solutions designed to function atop the lightning network. They aim to address the blockchain scalability trilemma by offering low transaction fees and nearly instantaneous processing confirmation times. However, security and privacy remain as adoption growth obstacles. The hashed timelock contract is the well-known conditional payment transfer protocol designed for payment channel networks. However, it can disclose identities and exchange histories, making it vulnerable to wormhole attacks. Additionally, current solutions rely either on the ideal anonymous communication channel assumption or fail to provide complete path privacy protection. In this paper, we propose the efficient multi-party conditional payment flow (EMCPF) protocol. It is a lightning network-compatible and privacy-preserving payment protocol designed to protect all user identities, reduce collateral locking time, and resist wormhole attacks. Moreover, it does not rely on ideal routing assumptions and instead employs layered encryption. Security analysis conducted under the universal composability model shows that no information can be disclosed if there is at least one honest user within the payment path. Functional analysis was also provided to support our privacy and security claims. We also performed theoretical analyses that compare EMCPF with other existing payment protocols based on complexity, efficiency, and the phases involved. Our simulations using lightning network snapshots show that EMCPF outperforms the current state-of-the-art solutions in terms of computational time and communication overhead.