Scaling Solutions for the Blockchain

November 2015 - November 2018
About 69,500 €
Funding organization: 

Politecnico di Torino

Person(s) in charge: 
Executive summary: 

The goal of the research project is to analyze capabilities and limitations of off-chain payment networks, the most explored solutions which aim to solve the well-known blockchain scalability issue.

Since June 2017, the research project is conducted by the Nexa Center in cooperation with Fulgur Lab.


Bitcoin is a decentralized cryptocurrency that allows mistrusting peers to send/receive monetary value without the need for intermediaries. Bitcoin relies on the blockchain, a distributed peer-to-peer public ledger where each peer stores all the history of Bitcoin economic transactions. The blockchain is affected by a scalability problem: as at maximum, in fact, only 7 transactions per second can be registered on the blockchain.

One of the more explored proposals that address the blockchain scalability issue is the off-chain scaling: it enables off-chain payments, i.e., payments that do not need to be registered on the blockchain and are not subject to the scalability limit. Off-chain scaling approaches are based on payment channels. A payment channel is a two-party ledger whereby two parties can exchange an unbounded number of off-chain payments. Two-party payment channels can be linked together to build a payment network, thus allowing off-chain payments also among parties not directly connected by payment channels.

The Lightning Network (LN) is the mainstream payment network for Bitcoin. On December 2018, such payment network is constituted by almost 2 thousands nodes and more than 13 thousands payment channels, with around 450 bitcoins in the network (being worth more than 1.5 millions of dollars).

The Lightning Network is characterized by features that, if not properly studied and controlled, might undermine the development of a healthy payment network, i.e., a network that supports fast and successful payments. The features are the following: the supported payments amount is limited by the economic capacity of payment channels; channel capacities may be depleted in case of high payment rates; uncooperative behavior of
peers in the network may cause payment delays.


The goal of the present research project is to analyze capabilities and limitations of off-chain payment networks. To accomplish with this goal, I developed CLoTH, a simulator for payment networks. The CLoTH simulator allows to identify issues of payment networks and to estimate effects of optimization actions before deploying them. Therefore, it is a valuable tool for assisting in steering future developments of payment networks.

CLoTH is a discrete-event simulator that simulates payments on payment networks. It takes as input parameters defining a payment network (e.g., number of peers and number of channels per peer) and parameters of the payments to be simulated on the defined network (e.g., the payment rate and payment amounts). It generates performance measures in the form of payment-related statistics, e.g., the probability of payment failure and the mean payment complete time.


1) The CLoTH simulator. To the best of our knowledge, CLoTH is the first simulator for off-chain payment networks, especially the Lightning Network, which constitutes the main technical solution for addressing the well-known scalability problem of the Bitcoin blockchain. The tool simulates input-defined payments on an input-defined payment network and produces performance measures in the form of payment-related statistics (e.g., mean payment time and probability of payment failure). CLoTH helps to predict issues that might emerge in the development stages of a payment network and to estimate the effects of an optimisation action before deploying it.

2) Simulation results of the Lightning Network performance. Using CLoTH, We ran simulations on a recent snapshot of peers and channels of the Lightning Network and we discovered the configurations in which a payment is more likely to fail than to succeed on such network. In addition, we ran a set of simulations on payment networks generated by the simulator using their statistical description. In this set of simulations, we discovered those values of the network parameters that can guarantee good performance of payment networks.

3) A journal paper titled "The CLoTH Simulator for HTLC Payment Networks with Introductory Lightning Network Performance Results", Marco Conoscenti, Antonio Vetrò, Juan Carlos De Martin and Federico Spini, accepted for publication in the MDPI Information journal on September 2018. The paper presents the CLoTH simulator and the simulation results above-mentioned.

4) A literature review on the blockchain. Such study highlights the features defining the blockchain
(decentralization, absence of trust and of identification of peers, distributed consensus protocol based on economic incentives and cryptography), points out the main research challenges of the blockchain (scalability and peer anonymity) and discusses possible applications of this technology. The literature review was published as a paper titled "Blockchain for the Internet of Things: a Systematic Literature Review" in the proceedings of the 2016 IEEE/ACS 13th International Conference of Computer Systems and Applications (AICCSA) with authors Marco Conoscenti, Antonio Vetrò, Juan Carlos De Martin.