StarkPay offers an alternative to Lightning payments

StarkWare has announced StarkPay, a payment scalability engine that could serve as an alternative to Lightning Network, the company writes in a blog post. StarkWare discusses Lightning’s drawbacks, contrasting the system with StarkPay.

StarkWare names liveliness requirement as a possible security issue of Lightning. For payment to go through, Lightning requires payer, payee and routing nodes to be online when making a transaction, an inconvenience and a possible security risk. Moreover, the payee is required to monitor the transaction. Alternatively, they may opt to pay for the use of a watchtower service.

StarkWare also raises the issue of capital inefficiency. The capital used in a transaction is locked up per channel, not per payer. Moreover, if routing nodes are used, the nodes need to lock at least the amounts necessary for the payment. A possible solution to this problem requires centralisation, which may pose security risks. Both routing nodes and the central node can be perceived as honey pots and attract hackers. To make matters worse, they are online most of the time to enable transactions.

In contrast, StarkPay doesn’t have any liveliness requirement as it uses an on-chain and off-chain building blocks. A payment processor as well as prover, which “generates STARK proofs attesting to the validity of batches of payments” are off-chain. Only after the prover verifies “checks digital signatures, and verifies that the Payer has sufficient funds, and then updates the balances commitment,” the contract is sent to verifier contract on-chain. StarkWare also notes that "Bitcoin in its current form cannot support an efficient STARK verifier running on-chain," so StarPay's feature would not work on Bitcoin.