# Evaluating Methods for the Identification of Off-Chain Transactions in the Lightning Network  
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[PERSON]  
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allows users to do transactions without the actual publishing of the transaction in the Bitcoin ledger itself. The transactions are not included in the blockchain, which is why they are referred to as off-chain transactions. This makes it possible for more transactions to be done without increasing the capacity of the Bitcoin system itself. It can be thought of as an overlay layer on top of the Bitcoin system since it requires the Bitcoin system for verification and conflict resolution. One of such overlay networks is the Lightning network. The Lightning network, as described by [PERSON] and [PERSON] [2], is a payment channel network currently deployed on top of the Bitcoin network. A payment channel is a one-to-one channel allowing two participants to exchange funds between each other. The Bitcoin blockchain has been used in the past in research projects focusing on anonymity and privacy of users [4; 5]. Because the data in the blockchain provides a complete record of how funds are moved between entities, it is relatively easy to analyze the data from the blockchain and determine user involvement in transactions and the flow of funds. To achieve this, we group and contextualize the transaction information to provide understanding for past events (e.g., for forensic purposes) as well as to understand the implications for user privacy.  
The use of the second layer network allowing transactions to be done off-chain makes traditional blockchain analysis difficult as all the transactions within the Lightning are invisible to the blockchain proper. However, as the Lightning network is built on top of Bitcoin, there is a need for on-chain transactions to manage the payment channels. These on-chain transactions from the LN are recorded on the blockchain just like any other Bitcoin transactions and the data contained in them is validated the same as any other transactions; they, however, do not provide the explicit record of how funds have moved inside the LN, unlike the Bitcoin transactions do for the Bitcoin network. This means one can still analyze the ledger (data in the blockchain) to see how funds moved inside the Bitcoin network, but one cannot do this to the same degree for the Lightning network. [PERSON] and [PERSON] [6] point out that the methods used for blockchain analysis in earlier research is no longer effective for payment networks. If systems such as LN are widely adopted and used, the majority of transactions would be done off-chain and the only on-chain transactions would be the ones required for the payment channels to operate. [PERSON] et al. [7] identifies some possible privacy implications of the on-chain transactions from payment channels networks, so there might be possibilities of using blockchain data related to payment channels networks to reveal something about users or transactions.  
**Research questions.** In this work, we are interested in the kind of data that leak from the off-chain network through to the blockchain. What can be deduced and inferred about the layer-two overlay network based on the transactions recorded in the ledger? A second aspect is to explore how unique the transactions related to the Lightning network are.