Non-Custodial Wagering System Using Lightning Network Smart Contracts
Find Innovative SolutionsGenerate Solutions
Solution Overview
Problem
Existing peer-to-peer wagering platforms require centralized intermediaries to manage and settle wagers, leading to high costs, regulatory burdens, and limitations in facilitating micropayments and cross-border transactions.
Innovation Solution
A system and method utilizing cryptographic payment networks like the Lightning Network to enable non-custodial, peer-to-peer wagers, using an arbiter module for selecting wager terms, a smart wager module for creating and managing smart contracts, a lightning service provider manager for ensuring payment capacity and liquidity, and an oracle module for verifying the validity of wagered events.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If a centralized intermediary is used to manage and settle wagers, then the wagering platform can operate with established trust and regulatory compliance, but the costs and regulatory burdens increase significantly
Solution Approach 1:
The patent extracts the trust and settlement functions from the centralized intermediary and relocates them to the peer-to-peer participants through cryptographic verification. The arbiter module is reduced to only matchmaking and event verification, while the actual wager settlement occurs directly between users via smart contracts on the blockchain, eliminating the need for the intermediary to hold or manage user funds.
Solution Approach 2:
The patent introduces a blockchain-based smart contract intermediary that facilitates peer-to-peer wager settlement without requiring a centralized custodian. The smart contracts automatically execute settlement based on verified event outcomes, acting as a trustless mediator that eliminates the need for expensive centralized trust infrastructure while maintaining regulatory compliance through transparent, auditable operations.
2Reliability
If a centralized ledger is used to settle wagers, then fund security and control can be maintained, but micropayments and cross-border payments become nearly impossible
Solution Approach 1:
The patent transitions from a traditional centralized ledger operating in a single dimensional space to a multi-dimensional blockchain infrastructure that combines public blockchain transparency with private Lightning Network channels. This dimensional shift enables simultaneous achievement of fund security through cryptographic proofs and versatile payment capabilities including micropayments and cross-border transactions through the layered blockchain architecture.
3Ease of operation
If a centralized arbiter holds and transfers user funds, then wager settlement can be controlled and monitored, but the system requires significant financial and legal barriers to set up and maintain
Solution Approach 1:
The patent implements self-service wager settlement where users independently manage and control their own funds through non-custodial smart contracts. The arbiter module settles wagers by verifying event outcomes and triggering automatic smart contract execution, eliminating the need for the arbiter to hold or manage user funds. This self-service approach removes financial and legal barriers while maintaining settlement control through programmable, auditable smart contract logic.
Data Source
AI summary
A system and method for facilitating a non-custodial, peer-to-peer wagered event for users. The system has an arbiter module configured to facilitate a selection of wagering terms. The system also provides a smart wager module configured to create and manage smart contracts that has the wagering terms. A lightning service provider manager module also disclosed to ensure a payment capacity and a liquidity, thereby allowing a settlement of the smart contracts. Finally, the system has an oracle module to verify and confirm a validity of the wagered event.