Lightning-Network on Decred Blog

LN & Multi-Owner Tickets

Mon, 11 Nov 2019 00:00:00 +0000

One consistent question over the past few months as Decred’s Lightning Network has entered testnet, is on how it relates to the staking system and if they will be somehow integrated.

Now that dcrlnd, our port of the most prominent LN implementation available, is synced to the upstream work and nearing mainnet release, I feel it’s time to show one of the things that we’ve been leading up to: a plan for implementing multi-owner tickets over the Lightning Network.

The greatest benefit of this work is that once deployed, the staking system will be truly approachable by all interested parties, even those without sufficient funds to purchase a full ticket and in the future where lower stake rewards make large on-chain splits uneconomical.

In this blog post I’ll review the motivation for this work and present a rough outline of the constructions and changes that are needed for it to become a reality.

2018 Decred Roadmap

Wed, 28 Feb 2018 00:00:00 +0000

It is finally time for the 2018 Decred roadmap to be released. 2017 has been quite an eventful year for both Decred and the entire cryptocurrency domain, with exchange rates surging and a substantial increase in interest from the conventional finance sector. Decred has continued with its approach of generating deliverables before hyping them, despite many other projects in the space continuing to relentlessly hype their work far in advance of generating deliverables or focusing on exchange listings in lieu of doing any substantive work. We have substantially improved our marketing in the past several months and expect a strong uptrend to continue on this front throughout 2018. Here is a summary of what we have planned for the rest of 2018 and early 2019:

SPV Wallet Support - Instead of taking the typical wallet service approach where wallets connect to a centralized server, we have added support for a proper SPV mechanism that uses compact filters and works over the P2P network.
Politeia Voting - Our proposal system is nearing completion and will allow users and stakeholders to make proposals, dictate what does and does not get funded, and participate in project-level decision-making.
Lightning Network - The bulk of the work to port Lightning Labs’ lnd to Decred has been completed and it will be released soon.
Initial Privacy Release - Privacy work has begun in earnest and we will make an incremental privacy release where we release working code and give further information about our plans and approach.
Decentralized Control of Funds - While Politeia voting will be used to control the flow of dev org funds in the meantime, we will be creating a smart contract that will fully decentralize control of the dev org funds.
Decentralized Autonomous Entities - Using a similar method as that used to decentralize control of the dev org funds, we will allow for the creation of DAEs on the Decred chain.
Scalability Optimizations - A variety of changes, some of which are consensus changes, are required to improve the scaling properties of Decred, e.g. a new signature algorithm, multipeer sync support, and header commitments.
Decrediton Integrations - The Decrediton GUI will be adding new integrations to support SPV, mobile, Politeia voting and Lightning Network.
Decentralized Exchange - We will draft a proposal for a cryptocurrency-only decentralized exchange and share it publicly.
Marketing Growth - Decred has lined up a presence at many of the premier cryptocurrency trade shows for the rest of 2018 and will continue dialing up its marketing efforts.

These roadmap items are discussed in greater detail below.

Lightning Network in Practice

Tue, 23 May 2017 00:00:00 +0000

Lightning Network (“LN” for short) is a recently-proposed, and even more recently implemented, low-latency off-chain micropayment system that can work with Bitcoin or other similar cryptocurrencies, such as Decred. Since LN makes liberal use of smart contracts, the details of how it works are, unsurprisingly, complex. To make LN more tangible from a non-technical perspective, we will view it through the lens of practical engineering considerations and the concepts that drive those considerations.

The utility of LN is driven by several major considerations in the context of cryptocurrencies:

low-latency payments - Many potential use cases for a modern system of transmitting value require a low latency, e.g. point-of-sale purchases. Waiting for an on-chain transaction places unreasonable constraints on both the time between blocks in a blockchain and what is considered an acceptable delay for payment to confirm.
deferred settlement - In order to minimize the number of transactions that flow between banks, banks make use of a net settlement process wherein multiple transactions between a given pair of banks are consolidated into a single transaction at the end of each day. Since cryptocurrencies effectively allow you to “be your own bank”, having a similar deferred settlement process substantially reduces transaction load on the blockchain and reduces transaction fees, allowing it to scale much better as the transaction rate increases.
privacy enhancement - A blockchain for any publicly available cryptocurrency is necessarily a public ledger, even when the details of ledger entries are obfuscated by cryptography. By taking transactions off-chain, those transactions have their privacy enhanced simply by merit of not being in the public ledger.
cross chain atomic swaps - Reliance on centralized exchanges is a major weak point of cryptocurrencies, whether we are talking about exchanges that handle fiat currencies or that handle cryptocurrencies exclusively. Cross chain atomic swaps will create liquidity between Decred and other cryptocurrencies without the counterparty risk that exists between users and centralized exchanges.

The benefits of LN are clearly quite substantial, per the considerations above. However, there are some notable weaknesses with LN that users need to be aware of:

counterparty theft - Since LN transactions occur off-chain, it is possible for a counterparty in a payment channel to attempt to steal the funds in the channel, but this can only succeed under certain conditions and is preventable. Conventional on-chain transactions do not suffer from this problem because they are written directly to a blockchain, an immutable ledger.
centralization of nodes - LN transactions are handled by a network of nodes that is separate from the underlying blockchain, and there is potential for these nodes to become centralized, despite them not having custody over coins. Operating a busy LN node is a potentially expensive operation, creating a barrier to entry for operating such a node and correspondingly increasing centralization.

Despite these weaknesses, I believe that the benefits of LN far outweigh the potential downsides. Each of these considerations is addressed in greater detail below.

2017 Decred Roadmap

Mon, 09 Jan 2017 00:00:00 +0000

The time for a new Decred roadmap has finally arrived. While many users have been keen to know where the project is headed in detail, we have intentionally avoided laying out our longer term plans in order to prevent other projects from implementing these ideas before they make it into Decred. I recognize that our approach with Decred runs counter to most other cryptocurrency projects, which often focus much more on hype and marketing than on development and sound engineering. Instead of hyping future work in advance of its completion, we have quietly completed our work and will hype it as it goes into production. Now that we are close to our first major post-launch milestone, hard fork voting, it is a good time to share where Decred will go from here. Here is a summary of what we have planned for Decred in 2017:

Convert Decred into a stakeholder-directed DAO - While other projects have attempted to create a DAO via a monolithic smart contract, Decred will build a DAO in several steps, ensuring each component works independently before putting it into production.
- Hard fork voting - Stakeholders will be able to vote on all hard fork changes to Decred, with only those changes obtaining greater than 75% support being activated.
- Public proposal system - After hard fork voting is in production, we will create an off-chain system where Decred users can submit proposals for future work to be performed by the development organization, Decred Holdings Group (“dev org” or “DHG”).
- Decentralized control of DHG funds - Currently, the control of DHG funds is centralized, and this will be resolved by creating a system whereby control of these funds is decentralized, e.g. based on stakeholder voting.
Lightning Network support - The lightning network is the most directly useful application of smart contracts to date since it allows for off-chain transactions that optionally settle on-chain. This infrastructure has clear benefits for both scaling and privacy.
Improved GUI wallets - We have made substantial progress with GUIs, Paymetheus (Windows) and decrediton (Windows, OS X, and Linux), and will continue to improve the user experience.
RFP process change - To date, the RFP process has involved giving quotes on deliverable sets, and this system is cumbersome to administrate and maintain. The RFP process will change to one where individuals and businesses will be contracted on a longer term basis to work for the project. As part of the RFP changes, we will be looking for contractors to do marketing, advertising, documentation and community management work.
Presence at events - With hard fork voting nearly ready for production, we have some legitimately interesting content to discuss at events. Our presence at events will ramp up starting in late Q1 2017.
Enhanced privacy - Starting in late Q2 or early Q3 2017, we will propose a new initiative to enhance user privacy.
Payment integration support - Instead of only focusing on Decred from a speculative position, we will support efforts to integrate Decred as a payment method for businesses starting in Q1 2017.

Each of these roadmap items is discussed in greater detail below.