๐ฐ Lightning Labs co-founder Olaoluwa Osuntokun proposed LayerTree: letting thousands or even millions of users share a single Bitcoin UTXO while keeping track of each personโs balance and preserving their right to exit unilaterally. It sounds like bringing an exchangeโs โeveryone shares one pool of moneyโ model on-chain, but the key difference is that users donโt have to trust only the operatorโs database.
๐ก LayerTree stores usersโ balances in an off-chain Merkle Sum Tree, while the chain holds only the shared UTXO and a commitment to the treeโs root. The sum of the balances in the tree must match the funds in the UTXO, and changing any leaf node changes the root. To exit, a user can submit their leaf node, Merkle proof, and signature without the operatorโs approval. Here, O(1) means exiting requires just one transaction; it doesnโt mean the proof size stays constant. The proof still grows as O(log N) with the number of users.
๐ฅ Everyday transfers try to avoid touching on-chain state. A Channel leaf puts a Lightning channel in a tree leaf, with the operator forwarding payments as HTLCs; a voucher is more like a digital check that can be redeemed on-chain. Once the recipient has a signed voucher, they can submit a CLAIM themselves if the operator wonโt cooperate, allowing the script to deduct funds from the payerโs balance and create a new leaf.
๐ค But โredeemable on-chainโ doesnโt mean risk-free. Alice could sign vouchers for two people that each exceed her balance. Both signatures would be genuine, but there wouldnโt be enough money to cover both, so whoever submits first might get paid. Older vouchers could also become invalid when the leafโs state number is updated, so until a voucher is settled, it still carries the issuerโs credit risk.
๐ The most appealing part of this design is that it keeps everyday payments off-chain while giving users a way to exit on their own. The real challenge is handling unsettled vouchers and competition over balances. Would you be willing to put your funds into this kind of shared UTXO structure?
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