Blockchain state channels with compact states through the use of RSA accumulators

Abstract

One of the major concerns regarding currently proposed public blockchain systems relates to the feasible transaction processing rate. It is common for such systems to limit this rate to maintain the required levels of security and decentralisation. State channels are an approach to overcome this limitation, as they aim to decrease the required on-chain transactions for a given application and thus indirectly increase the capacity (in terms of applications) of public blockchain systems. In the present paper, we propose a state channel design that, through the use of RSA accumulators, operates on a compact state structure. This scheme is optimal for applications whose state includes large sets of elements. The novel state channel design is presented by analysing all state channel operations and how they have to be revised. The security of the design is discussed, while a practical use case scenario regarding the use of the design for an on-chain asset (e.g., non-fungible tokens) exchange application is also analysed.