LibraryInteroperability2018Design paperCorpus record
Scalable Funding of Bitcoin Micropayment Channel Networks
Channel factories. Conrad Burchert, Christian Decker and Roger Wattenhofer.
A factory is a shared on-chain output that several parties can use to allocate many channels off-chain, so the chain sees the factory and not every channel.
A reading of the public document. Not a copy of it, and not a claim about a later network that reused the name.
A consumer wallet that opens one on-chain channel per user has not used this. Ask what the chain actually has to see.
- Evidence
- Primary paper
- Re-measured
- No
- Assumptions
- 3
- Records linked
- 2
Code
Source, repository, and what is actually hosted
- Burchert, Decker, Wattenhoferhttps://tik-old.ee.ethz.ch/file/a20a865ce40d40c8f942cf206a7cba96/Scalable_Funding_Of_Blockchain_Micropayment_Networks%20(1).pdf
- The source URL is not a GitHub repository. No code remote is invented.
- Full text is not mirrored. Public availability is not a licence to copy the file onto this site.
- Add to a reading list
01 Claim ledger
What the paper is allowed to say
Each row is a sentence already in the study. The status is the same on every row: a model claim, not a live measurement.
Claim 01 · Paper model
The defect
Opening a Lightning channel is an on-chain transaction. A million users opening channels is a million transactions.
Claim 02 · Paper model
The rule
A factory is a shared on-chain output that several parties can use to allocate many channels off-chain, so the chain sees the factory and not every channel.
Claim 03 · Paper model
How it is put together
One on-chain output funds many pairwise channels. Rebalancing inside the factory does not touch the chain. The factory has its own dispute path.
Claim 04 · Paper model
Where the claim stops
The paper is a construction, not the Lightning specification.
02 Three cuts
Observation, model, falsifier
A desk does not stop at the summary. Each claim is cut three ways, using only this study's own assumptions and checks. Nothing here is a new figure.
01 The defect
Observation
What the study says
Opening a Lightning channel is an on-chain transaction. A million users opening channels is a million transactions.
Falsifier
What would retire it
How many channels does one on-chain output fund?
02 The rule
Observation
What the study says
A factory is a shared on-chain output that several parties can use to allocate many channels off-chain, so the chain sees the factory and not every channel.
Model
What has to hold
A factory concentrates dispute risk in one output.
Falsifier
What would retire it
How many channels does one on-chain output fund?
03 How it is put together
Observation
What the study says
One on-chain output funds many pairwise channels. Rebalancing inside the factory does not touch the chain. The factory has its own dispute path.
Model
What has to hold
A factory concentrates dispute risk in one output.
Falsifier
What would retire it
How many channels does one on-chain output fund?
04 Where the claim stops
03 Sequence
One action, as an operating tape
- 01Parties lock funds in the factory.
- 02They assign slices to channels by off-chain updates.
- 03A dispute or a close publishes only what is needed to recover a slice.
- 04How many channels does one on-chain output fund?
04 Load-bearing
The argument, and where a pitch drops it
Why it is still on the desk
The cut
A consumer wallet that opens one on-chain channel per user has not used this. Ask what the chain actually has to see.
Why it carries weight
If this cut is skipped, the paper's name is being used without the mechanism that makes the name mean anything.
Where it is dropped
A later client, parameter or reward formula is a different object from this paragraph.
After the text
The cut
Later factory and timeout-tree designs return to the same ratio: on-chain bytes per user. The 2018 paper is the first clear statement.
Why it carries weight
If this cut is skipped, the paper's name is being used without the mechanism that makes the name mean anything.
Where it is dropped
The paper is a construction, not the Lightning specification.
05 Register
What has to be true
Model · Not re-measured
The paper is a construction, not the Lightning specification.
Model · Not re-measured
A factory concentrates dispute risk in one output.
Model · Not re-measured
It does not create inbound liquidity by magic.
06 Divergence
What happened after the paper
Later factory and timeout-tree designs return to the same ratio: on-chain bytes per user. The 2018 paper is the first clear statement.
A later client, parameter set, or reward formula is a different object. Cite this paper for the mechanism. Cite a primary release for the network. This desk has not re-run the proof.
07 Pre-mortem
What to check before you use the idea
- 0 of 3 marked on this browser. A mark is a reading note, not a pass, a rating, or a recommendation.
08 Anatomy
The paper, in the order a builder needs
The problem it names
Opening a Lightning channel is an on-chain transaction. A million users opening channels is a million transactions.
What the design proposes
- One on-chain output funds many pairwise channels.
- Rebalancing inside the factory does not touch the chain.
- The factory has its own dispute path.
How the mechanism is specified
- Parties lock funds in the factory.
- They assign slices to channels by off-chain updates.
- A dispute or a close publishes only what is needed to recover a slice.
What this page does not treat as proven
- The paper is a construction, not the Lightning specification.
- A factory concentrates dispute risk in one output.
- It does not create inbound liquidity by magic.
Why the desk still reads it
A consumer wallet that opens one on-chain channel per user has not used this. Ask what the chain actually has to see.
09 Lexicon
Terms, opened into the record
- Factory
- One shared output that allocates many channels.
- Slice
- The portion of the factory assigned to one channel.
10 Repository
Every linked record on this page
Underlined words open a page that already exists: a concept, a protocol profile, a failure record, or another paper. If a word is not underlined, this desk does not have a record for it.
This is Blockchain Lab's reading of a public design paper. It is not the paper, not a copy of it, and not an offer of tokens, equity, custody or a partnership. Later network behaviour can diverge from the text. Nothing here is investment, legal or technical advice.
Research status: Design paper. Last reviewed: 1 October 2026. This is a reading of a public paper, not investment, legal or security advice.