On January 30, a group of researchers at the Massachusetts Institute of Technology (MIT) announced that they had discovered a way to speed up transaction processing time on Blockchains. Dubbed “Payment Channel Networks” or PCN, this system notably features a crypto routing scheme that could deliver significant benefits.
According to MIT’s explanation, transactions that would be performed within PCN would only involve a little help from the Blockchain. PCN users would pair with one another, and they would form escrow accounts with a designated amount of funds off the chain. This system, as explained, would make way for the creation of a vast and interconnected network of shared accounts.
Users who route payments would utilize these accounts, and the process would only need a ping on the Blockchain to create and close the accounts. Aside from speeding things up, this process can also boost profits as accounts can collect a minimal fee when the transactions were routed through them.
MIT also explained that PCN is designed to rely solely on bidirectional joint accounts. It means that users can only route their payments and perform transactions on channels that hold sufficient funds.
This solution, as emphasized by the researchers, would avoid a user in the shared account to handle too many transactions. Frequently, this scenario results in an account with zero balance, which ultimately makes it impossible to route additional transactions.
Alongside PCN comes Spider, a technique that, according to MIT, could split a full transaction into packets. These packets would then be transmitted at varying rates across multiple channels. One of MIT’s researchers, Vibhaalakshmi Sivaraman, said that the shortest routing path often causes account imbalances which then lead to payment channel depletion and system paralysis. Meanwhile, routing payments in which both users’ funds in a joint account are balanced enable them to reuse their initial funds for conducting transactions over and over again.