Payment channels are the most prominent solution to the blockchain scalability problem. We introduce the problem of network design with fees for payment channels from the perspective of a Payment Service Provider (PSP). Given a set of transactions, we examine the optimal graph structure and fee assignment to maximize the PSPs profit. A customer prefers to route transactions through the PSPs network if the cheapest path from sender to receiver is financially interesting, i.e., if the path costs less than the blockchain fee. When the graph structure is a tree, and the PSP facilitates all transactions, the problem can be formulated as a linear program. For a path graph, we present a polynomial time algorithm to assign optimal fees. We also show that the star network, where the center is an additional node acting as an intermediary, is a near-optimal solution to the network design problem.
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