Litex Lab is a decentralized value exchange ecosystem based on layer 2 technology, capable of achieving off-chain scalability and cross-chain communication, addressing the core pain points of low efficiency on main blockchain networks and isolated public chains in the blockchain industry. The Litex Lab value ecosystem can support small transactions, decentralized exchanges, and other upper-layer applications, opening up underlying functionalities through an API layer to establish a rich value exchange ecosystem, bridging the digital world with the real world, and forming the infrastructure connecting the future blockchain world.

Project Advantages

Decentralized Ecosystem: Fiat currency in the system is provided by token buyers, and all parties in the ecosystem share fee revenue, not relying on centralized institutions like exchanges, nor does it involve fiat currency pools or official operators;
High Performance at Low Cost: With an increase in network nodes, processing capacity can reach millions of transactions per second, meeting daily payment timeliness requirements while maintaining extremely low transaction fees;
Deep and Stable Implementation: The foundation and partner teams have deep experience and resources in the payment industry, which can rapidly promote global acquirers to join the ecosystem and share dividends, avoiding instability factors arising from cooperation with card organizations;
Rapid Merchant Expansion: Merchants can still settle with acquirers following their original processes, without incurring additional costs or bearing the risk of coin value for integrating LITEX;
Avoiding Loss of Funds: Payment channels constructed based on smart contracts have strict limitations on fund destinations, user balances are settled within the channel, and even under attack, they cannot be stolen by third parties.

Application Scenarios

First, lets discuss how cryptocurrency consumption scenarios would look without introducing LITEX:
Suppose Alice only holds Bitcoin and wants to buy a cup of coffee from cafe owner Bob. If Bob is just an ordinary businessman who isnt very tech-savvy and doesnt follow trends, the probability that he has a Bitcoin wallet is almost zero, meaning Alice must first exchange her Bitcoin for fiat before she can pay Bob. Alice can log into a cryptocurrency exchange to sell her Bitcoin, and to quickly obtain fiat (Bob may already be grinding coffee beans), she needs to list it at a relatively low price and pay relatively high transaction fees. Due to the small transaction amount, even if Alice successfully sells her Bitcoin, the transaction settlement time could take several hours, by which time the coffee would be cold.
After the failed transaction, Bob gained some understanding of Bitcoin; he appreciates its philosophy but doesnt want to bear the risk of coin value fluctuations by accepting Bitcoin payments. Therefore, he connects to a Bitcoin payment gateway provider, allowing him to receive Bitcoin payments while ultimately settling in fiat converted by the payment gateway, which seems more normal. To facilitate payments, Alice has also prepaid this payment gateway (mainnet transaction, requiring higher fees and longer time), so this Bitcoin payment experience was good, and Alice quickly got her freshly made coffee. Bob logs into the gateway backend to withdraw the $5 transaction, only to find that due to excessively high Bitcoin mainnet transaction fees, the withdrawal threshold has been raised to $100 by the payment gateway! Reluctantly, Bob can only wait until Alice buys enough 20 cups of coffee before withdrawing, which will take at least 20 days – if Alice comes every day. On the 19th day, Bob discovers that the payment gateway went bankrupt after losing a large amount of Bitcoin and cash due to a hacker attack (centralization risk), leaving his unwithdrawn $95 in limbo, and at this time, Alice also complains to Bob that her unused Bitcoin was also transferred away by hackers in this incident.
Now we introduce LITEX to experience the convenience and security brought by a decentralized payment network.
Having suffered losses, Bob hasnt given up on Bitcoin, so he connects to the new technological solution, LITEX. The connection process is no different from other payment gateways (like Visa), proceeding smoothly, so Bob informs Alice that he can accept Bitcoin payments again. To avoid the centralization risks encountered last time, Alice also becomes a LITEX user and establishes her own payment channel. So she opens the LITEX client, scans Bobs payment QR code, directly inputs the fiat currency amount of $5 for the coffee, clicks pay – one second later, Bobs cash register indicates receipt of a $5 payment, Bob clicks to confirm receipt, finding that $5 has been directly credited to his account; Alices phone also prompts payment completion, with the equivalent $5 worth of Bitcoin deducted from the channel balance, with zero fees. With LITEXs help, Alice conveniently bought a cup of coffee using Bitcoin without paying any transaction fees; Bob received the fiat converted from Bitcoin in real-time and can now confidently continue to accept Bitcoin payments. In fact, even if LITEX is attacked and loses part of its nodes, the already established LTXN can still meet Alices payment needs; even if the majority of nodes are destroyed leading to payment failure, neither Alice nor Bobs existing assets will suffer losses.

Technical Overview

1. Composite Decision Lightning Network Model
The Lightning Network is a general term for distributed networks implemented based on BOLT protocols. Classic Lightning Network designs can only achieve off-chain peer-to-peer transactions for cryptocurrencies, becoming powerless once it involves matching fiat currency transactions. The composite decision Lightning Network abstracted by LTXN integrates a decision layer network and an execution layer network into the same distributed system, sharing nodes while enabling deep interconnectivity, making the Lightning Network smarter, thereby realizing advanced routing functions such as matching exchange requests with payment requests, and through rule design, keeping the network topology healthy and efficient, avoiding the emergence of centralized nodes.
2. Matching Engine
The matching engine is a collection of distributed intelligent algorithms, the most complex core logic of LTXN. Most of the following descriptions are based on the simplest business category in the system for illustration, not involving specific data structures, nor discussing details about how the "non-card payment" business logic is applied to complex business processing and improving system stability, etc.
In the LTXN system, there are many payment requests and exchange requests simultaneously present. Payment requests generally have characteristics of relatively small amounts and very high immediacy requirements. Exchange requests vary depending on the situation: some users, to obtain lower exchange costs, can tolerate lower immediacy in the exchange process, even setting only an upper limit and ending the exchange at any time according to needs during the process; other users, to immediately obtain cryptocurrencies, can choose to pay higher exchange fees to complete the exchange in a very short time. In actual design, the ratio of timeliness/cost for user demand may fall anywhere between the aforementioned two situations, which we quantify in a certain way to serve as reference data for adaptive matching decisions at the node level.
Apart from the matching of timeliness/cost, matching the amounts of the two parties is also a very important link. A common scenario is where the exchange request amount exceeds the payment request, requiring LTXN nodes to match multiple qualifying requests across the entire network to form the optimal solution, considering factors including but not limited to currency type, amount, channel time cost, channel transmission loss, etc. If the payment request exceeds the exchange request, this situation involves larger payment amounts, in which case, in addition to the aforementioned factors, the main chain channels timeliness and cost should be weighed comprehensively. If the amount is too large, it is recommended that the user conduct a mainnet payment.
Lastly, the matching strategy also needs to consider connectivity costs. If payer and payee are located in two mutually disconnected networks, the cost of establishing an inter-network channel also needs to be considered, which is discussed in the routing section below.
3. Intelligent Routing
The establishment and closure of Lightning Network channels require on-chain transactions, generating relatively high time and monetary costs. Therefore, in most cases, there is no direct channel between consumers and token buyers, but rather transactions are conducted through intermediary nodes based on HTLC contracts. The intermediary node may be a single node or multiple nodes connected head-to-tail. To quickly find the shortest (or lowest-cost) path, each LTXN node has its own negotiation algorithm and node information cache synchronization strategy, allowing it to find a route at the fastest speed when demand arises and complete the transaction.
The withdrawal operation in the Lightning Network requires closing the payment channel, which keeps the topology of the entire network in a state of constant change: on the one hand, old channels may be closed and new ones opened at any time, with originally valid routes possibly being closed due to untimely passage, requiring immediate search for new routes; on the other hand, since each payment demand is different, the channel capacities (which can be understood as the diameter of the channel) between nodes will also differ. Besides considering channel capacity during initial routing, the routing process may need to perform real-time splitting and merging operations on payments, these business logics beyond traditional routing algorithm problem models require more detailed strategies to implement.
4. Lightweight Node
According to the BOLT protocol, Lightning Network nodes are designed as complete Bitcoin network nodes, implying that users joining the network must maintain a full data backup of tens of GBs in size, which is impractical in actual use. We design LTXN nodes based on Simplified Payment Verification (SPV) and add some data records required for business on this basis, so LTXN nodes do not need to maintain a full node nor store all user transactions in the entire network, only storing transactions related to users who have established channels with the node. Once a channel is closed and transactions are confirmed on the blockchain mainchain, the balance of both ends of the channel nodes will be written back to the mainchain, at which point users can choose to delete previous transaction data to optimize storage space. Optimized LTXN nodes will not occupy too much storage space, and a typical smartphone can fully support them.
5. Other
To realize the design of LTXN and meet the demand for small instant payments, LITEX Lab continues to delve into Lightning Network topology design and completes more efficient routing solutions through improvements to the BOLT protocol.

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