Cross-Layer Deanonymization Methods in the Lightning Protocol

Bitcoin (BTC) pseudonyms (layer 1) can effectively be deanonymized using heuristic clustering techniques. However, while performing transactions off-chain 2) in the Lightning Network (LN) seems to enhance privacy, a systematic analysis of anonymity and privacy leakages due interaction between two layers is missing. We present (Please, find full version this paper with appendix at https://arxiv.org/abs/2007.00764 .) heuristics that group BTC addresses, based on their LN, as well LN nodes, shared naming hosting information. also linking link $$45.97$$ % all nodes $$29.61$$ addresses interacting LN. These links allow us attribute information (e.g., aliases, IP addresses) $$21.19$$ contributing deanonymization. Further, these deanonymization results suggest security payments are weaker than commonly believed, users being mercy few five actors control 36 over $$33\%$$ total capacity. Overall, first method for across discuss implications.