Topic: The Lightning Network FAQ - page 63. (Read 33463 times)

I believe post a list of ALL services available for the Lightning Network in the OP, BitCryptex?

When will merchants start accepting Lightning Network payments?

[...] Here you can find a list of merchants who accept LN payments.

Plus easy solutions to get started, like BlueWallet. It might encourage users to actually try it.

Does anyone have thoughts on this recently published paper?

Flood & Loot: A Systemic Attack On The Lightning Network

I read about it a few days back, and I haven't read the entire paper. But I'm surprised a single attacker can influence enough channels to flood the blockchain by closing them all. Even if the attacker can't steal your funds, it's just annoying to loose open channels and having to pay fees again to reopen them.

Does anyone have thoughts on this recently published paper?

One of the risks that was identified early on is that of a wide systemic attack on the protocol, in which an attacker triggers the closure of many Lightning channels at once. The resulting high volume of transactions in the blockchain will not allow for the proper settlement of all debts, and attackers may get away with stealing some funds.

This paper explores the details of such an attack and evaluates its cost and overall impact on Bitcoin and the Lightning Network. Specifically, we show that an attacker is able to simultaneously cause victim nodes to overload the Bitcoin blockchain with requests and to steal funds that were locked in channels.

We go on to examine the interaction of Lightning nodes with the fee estimation mechanism and show that the attacker can continuously lower the fee of transactions that will later be used by the victim in its attempts to recover funds - eventually reaching a state in which only low fractions of the block are available for lightning transactions. Our attack is made easier even further as the Lightning protocol allows the attacker to increase the fee offered by his own transactions.

We continue to empirically show that the vast majority of nodes agree to channel opening requests from unknown sources and are therefore susceptible to this attack.

If the majority of the network ends up charging as much as LNbig.com or even more then the LN will be mostly known for instant and more anonymous small transactions. Do you think that a $0.12 fee for a $30 transaction being way too high is an over-exaggeration? Consider that there could be longer routes consisting of nodes with similar fee settings. Still, I do agree that nodes should earn more than they do by default, because they might need to rebalance their channels at some point. As far as I remember, someone proposed to increase the default fee settings (the basefee from 1 sat to 5 sat and the feerate from 1 to 500).

If the majority of the network ends up charging as much as LNbig.com or even more then the LN will be mostly known for instant and more anonymous small transactions. Do you think that a $0.12 fee for a $30 transaction being way too high is an over-exaggeration? Consider that there could be longer routes consisting of nodes with similar fee settings. Still, I do agree that nodes should earn more than they do by default, because they might need to rebalance their channels at some point. As far as I remember, someone proposed to increase the default fee settings (the basefee from 1 sat to 5 sat and the feerate from 1 to 500).

Does that support the theory that Lightning node operators who stake more of their capital in Lightning will charge more, not less, to route transactions?

Plus maintaining the node/rebalancing channels requires specialization. It's right that they charge more for providing efficiency, amd liquidity in LN.

You're right. The LN fees for larger payments would be nowhere near subsatoshi level if all nodes charged 0.1%-0.25% per transaction. Longer routes would be completely cost-inefficient. I believe that there will be plenty of smaller nodes offering lower fees. Currently, most LN nodes route payments at the default settings. Here are some of my calculations. Assumptions: BTC price - $10.000, routed payment value - $30.

LN fee = basefee + (amount * feerate / 1000000)

Default settings:



Currently known LNbig.com settings:



In my opinion, 1200 sat for a $30 transaction is way too much. If such payment was divided into 4 equal parts and sent through 4 different paths consisting of "default nodes" then 1 hop would cost:



That is definitely more cost-efficient and I believe that's what is going to happen in the future to most payments. Some parts of the payments, will be sent through cheaper routes.

The data from my post mentioned by Rizzrack is not really relevant; I should change that answer. Take this article from 2018 as an example for that year.

There are currently 25 nodes owned by LNbig.com. They provide about 52,19% (497,2647581 BTC out of 952,86 BTC) of the whole network's liquidity. I can't find any data on their recent earnings, but their Twitter account shares the amount of transactions and BTC passed through their nodes in the last 24 hours from time to time. You can clearly see the surge of the transactions in the last few months. Starting from 100-800 transactions in March and going to over 4000 in May. That is a huge change.

I have tried to calculate the possible earnings using the fee formula (basefee + (amount * feerate / 1000000) and the data from this tweet, but my results were far too off.

The 3rd March seems to have been the most profitable day. 161 routed transactions worth 2.24602985 BTC paid in total 219484 sat (0.00219484 BTC) in fees. At the current price of Bitcoin ($9300), it is about $20! Still, don't forget about the amount of coins locked up in all the nodes and the cost of opening transaction all channels.

The 24th January is even more impressive to me. 186 routed transactions worth 0.60161437 BTC paid in total 172378 sat (0.00172378 BTC) in fees. It is about $16 now.

Alex Bosworth shared that his node charged 0.25% per transaction and routed about $10,000/month which translates to earnings of about $25/month. He didn't say which node he was referring to, but since he is the CEO of yalls.org, we can assume that it was this one. That is actually interesting because of the significantly smaller capital. 

Coming back to earth, you are not going to earn much if your node doesn't provide enough liquidity. However, it is also worth mentioning that multipart payments are now available in all implementations. Once more wallets start supporting them, the earnings of well-connected, small nodes might increase.

Note: Keep in mind that 952,86 BTC is the amount of the funds locked up in public channels. Private channels are... private so we don't know how many of them exactly there are and what is their balance (although that might not be the case [5.4.2]). Such channels do not route any payments.