The architecture of our micropayments system is a fusion of research and experimentation with existing Layer 2 solutions. This eventually led to us building a home grown one, based on all our findings.
It first began as a research and development project as we strived to find the best design for fast, secure and trustless P2P payments. While blockchain payments are (generally) secure, censorship resistant, and have an open and permissionless APIs, they’re still relatively expensive and slow. And that just didn’t work in our case.
This lack of scalability – a network’s ability to grow and handle a growing number of users – means at a certain size the network will get clogged up by all the transactions being processed. Due to this, an Ethereum transaction could cost up to one dollar and take a couple of hours to be ‘settled’ in a block. These transactions get even more expensive when the network’s processing capacity becomes saturated. These limitations are unsuitable for the VPN service provided by Mysterium Network, which require fast, frequent and very small transactions – known as micropayments – executed on a global scale.
We analysed various Layer 2 solutions – independent networks or chains running ‘on top’ of the original blockchain to avoid it becoming too crowded. But none of these fit our particular use case. They were either still in their very early stage of development, too insecure or overly complex, or built for general use cases, making them non-optimal for Mysterium Network’s use case. These barriers led us to start working on a completely new payment system from scratch.
Developing a unique P2P payment system is not an easy task. Our goal was to create infrastructure which best serves the needs of both consumers of Mysterium Network, and nodes in the network.
Here are the main requirements of our proposed system:
- High throughput – the network’s ability to handle frequent and small payments (eventually thousands per second)
- Support for our native utility token, MYST
- Anonymity while also being secure, such as through the use of identity registration and reputation system
- Great user experience, removing as much complexity as possible for the end user.
Going back to the trust conundrum, we also had to consider that consumers won’t pay a large amount up-front and the service providers (nodes) are unlikely to offer their services without prepayment.
This is why we use a micropayment system, which lets nodes offer their service in short intervals, such as 20 seconds or 5 minutes. This pay-as-you-go model means that participants can start transacting straight away. A user can pay for a VPN service a couple of times per minute, sending (and therefore risking) only tiny amounts of tokens in exchange for the bandwidth they are renting.