modong: modong: I do want to bring up the discussion about the narrative of virtual channel across intermediaries. I think this narrative should not be promoted and encouraged to the developers.

Thank you all for the interest in our work!

Let us comment a bit on the points raised by Modong.

We agree that the need of blocking money by the intermediaries can be viewed as a disadvantage for some applications. For other applications, however, a bigger problem is the need to contact the intermediary for each microtransaction. As an example consider paying for a wifi access charged 1 gwei per every chunk of 100 KB. Suppose the payments are routed via one intermediary Ingrid (say: the “operator” of the whole system). The HTL approach would require contacting Ingrid for each chunk of data which introduces huge communication burden. Perun does not have this problem. Other applications where we envision Perun is for devices with only near field communication. In this setting these devices can carry out payments between each other even when the intermediary Ingrid is not available. Perun also has the advantage that balance updates can still be carried out when the intermediary is unavailable due to network off-time.

One way to look at it is that Perun simply gives the users an opportunity to have a smooth tradeoff between the “communication” and “deposits”. For instance, in the wifi example above: the users could register (in the ledger channel) the virtual channel once per each 10 micropayments. This would mean an interaction with Ingrid (but not with the blockchain) is needed once per each 1 MB transferred, and her deposit needs to be 10 gwei.

We believe that Perun will in general be used when there are very few intermediaries (frequently: just one intermediary). Then, the “deposit” (compared to the HLT approach) is rather limited. The true cost of blocking money is hard to estimate, but it seems reasonable to assume that it has to correspond to the inflation on ether, which Vitalik once predicted to be around 2% per year at most (note that blocking the money in Perun is risk-free, so there will be no premium for the credit risk). This would correspond to 0.005% per day, or in other words 0.05 cent for each 10 dollars blocked for one day. It’s actually an interesting question for the economists to provide a more scientific analysis of this.

Finally let us say in some cases one can get rid of deposits from the intermediaries, by switching to a weaker security model, where the intermediary can steal the money, but it becomes evident to everyone that he did it (see p. 15 of https://eprint.iacr.org/2017/635.pdf). We believe that it can make sense in cases when small amounts of money are at stake, and the intermediary has some established reputation.

Best,

The Perun research team