Maravedí: A Secure and Practical Protocol to Trade Risk for Instantaneous Finality

The efficiency of blockchain systems is often compared to popular credit card networks with respect to the transactions per second rate. This seems to be an unfair comparison since these networks do not complete a transaction from beginning to end. Rather they buy the risk and settle it much later. Typically transactions have only two players, the payer and the payee, and the settlement of this transaction requires time since it depends on basic properties of the consensus protocol. In practice, the payee, very often, needs to wait for confirmation in order to ship the traded goods. Alternatively, the payee, or merchant, can ship it in faith that the transaction will be confirmed. Our contribution, the Maravedí Protocol, introduces a third player to minimize the risk of the payee to be left without the payment even without the consensus layer confirmation. The main idea is that the third player can work similarly to a credit card company. That is, it buys the risk from the merchant, by a small discount, and allows the third player to pay it instantaneously via a payment-channel like protocol. In parallel, the third player receives the regular payment transaction from the payer that can be settled on the chain, thus, after waiting the consensus/blockchain required time. Moreover, the on-chain transaction pays the full amount, allowing the third player to cash in the discount. Hence on the side of the merchant, our protocol puts forth instantaneous finality in a novel way to the best of our knowledge.