Cumulonimbus: An Incentive Mechanism for Crypto Capital Commitment in Payment Channel Networks*

Payment channel networks (PCNs) are proposed to improve the cryptocurrency scalability by settling off-chain transactions. However, a significant barrier is that a PCN user must solicit sufficient capital owned by the counterparty on its channel (i.e., inbound liquidity) to receive payments. To alleviate this inbound liquidity problem, Channel Liquidity Marketplaces (CLMs), e.g., Bitcoin's Lightning Pool, have been introduced, such that users can buy and sell inbound liquidity by trading crypto capital commitment in PCNs. Existing CLMs lack good incentive mechanisms that can attract more user participation. To fulfill this void, we design Cumulonimbus, an incentive mechanism for trading crypto capital commitment, which satisfies truthfulness, individual rationality, budget balance, and computational efficiency. Particularly, Cumulonimbus considers two unique features of crypto capital commitment, referred to as demand indivisibility and supply divisibility. Extensive simulations demonstrate that Cumulonimbus achieves higher satisfaction ratio, liquidity utilization, and social welfare compared with a state-of-the-art CLM mechanism Lightning Pool [18].