  Decentralized marketplace applications demand fast, cheap and easy-to-use
cryptocurrency payment mechanisms to facilitate high transaction volumes. The
standard solution for off-chain payments, state channels, are optimized for
frequent transactions between two entities and impose prohibitive liquidity and
capital requirements on payment senders for marketplace transactions. We
propose PayPlace, a scalable off-chain protocol for payments between consumers
and sellers. Using PayPlace, consumers establish a virtual unidirectional
payment channel with an intermediary operator to pay for their transactions.
Unlike state channels, however, the PayPlace operator can reference the
custodial funds accrued off-chain in these channels to in-turn make
tamper-proof off-chain payments to merchants, without locking up corresponding
capital in channels with merchants. Our design ensures that new payments made
to merchants are guaranteed to be safe once notarized and provably mitigates
well-known drawbacks in previous constructions like the data availability
attack and ensures that neither consumers nor merchants need to be online to
ensure continued safety of their notarized funds. We show that the on-chain
monetary and computational costs for PayPlace is O(1) in the number of payment
transactions processed, and is near-constant in other parameters in most
scenarios. PayPlace can hence scale the payment throughput for large-scale
marketplaces at no marginal cost and is orders of magnitude cheaper than the
state-of-art solution for non-pairwise off-chain payments, Zero Knowledge
Rollups.
