AuxChannel: Enabling Efficient Bi-Directional Channel for Scriptless Blockchains

Payment channels have been a promising solution to blockchain scalability. While payment channels for script-empowered blockchains (such as Bitcoin and Ethereum) have been well studied, developing payment channels for scriptless blockchains (such as Monero) is considered challenging. In particular, enabling bidirectional payment on scriptless blockchains remains an open challenge. This work closes this gap by providing AuxChannel, the first bi-directional payment channel protocol for scriptless blockchains, meaning that building payment channels only requires the support of verifiably encrypted signature (aka adaptor signature) on the underlying blockchain. AuxChannel leverages verifiably encrypted signature to create a commitment for each off-chain payment and deploys a verifiable decentralised key escrow service to resolve dispute. To enable efficient construction of AuxChannel, we introduce a new cryptographic primitive, named Consecutive Verifiably Encrypted Signature (CVES), as a core building block and it can also be of independent interest for other applications. We provide and implement a provably secure instantiation on Schnorr-based CVES. We also provide a formal security analysis on the security of the proposed AuxChannel.