Published on: 2022-09-01T21:57:03+00:00
A routing node operator named Joost Jager is seeking input from other operators regarding a feature he has been wanting for some time. This feature would allow for inbound fees on Lightning Network channels, which are currently not an option. Jager explains that there are several reasons why he believes this feature would be beneficial. Firstly, for peers that tend to be liquidity sources and have most of the liquidity on his side, there is no current way to keep the channel balanced with fees, aside from setting a zero outbound fee. However, this often is not enough, and a high inbound fee would discourage payments through that route.Secondly, not all inbound traffic is created equal. If two different peers wish to route through him to the same outbound peer, he may value the two forwards differently depending on who the sender is. Currently, there is no way of expressing this to the market through fees, and he can only intercept and reject certain HTLCs, which damages his reputation.Lastly, Jager believes that greater expressivity in fee-setting generally allows markets to push more flows off-chain without having to loop or open new channels. While he thinks negative fees would be more impactful for this purpose, he believes that combining negative and inbound fees is where the real magic would happen.Overall, Jager believes that inbound fees would be helpful for the Lightning Network and is seeking input from other routing node operators.In a discussion regarding the Lightning Network on Github, the issue of traffic imbalance was brought up. Some nodes receive more traffic than they send, which can cause liquidity issues and failed payments. The current fee structure is designed to incentivize people to open channels to these imbalanced nodes by providing routing fees in exchange for locking funds and paying on-chain fees. However, one participant expressed concern that changing this incentive structure could make the network less reliable.Another participant argued that if merchants charge inbound fees, they may not attract enough liquidity and suggested that setting up a fee-charging gateway with a private channel to the main node accepting payments would be a better solution.The discussion focuses on the topic of inbound fees in Lightning Network and whether they are necessary or not. The argument is that inbound fees can be a tool for malicious nodes to misbehave and prevent routing through certain channels. However, it is also mentioned that selective failure of HTLCs by malicious nodes can also cause problems. The concept of setting high fees on outbound channels is also discussed, which affects traffic coming from all peers. The idea of compensating for locked up capital in less interesting channels is introduced as a reason for implementing inbound fees. It is argued that lack of inbound fees requires more trust and leads to centralization. Finally, the proposal of making the opener of a channel pay a fee to compensate for risk is suggested as an alternative.The discussion is regarding the idea of implementing inbound fees in the Lightning Network. Joost Jager proposed the idea and questioned whether it was fair that routing nodes weren't compensated for accepting incoming HTLCs, as their money gets locked up in a channel that may or may not be interesting to them. Bastien Teinturier replied that this doesn't make sense because the funds on the other side of the channel belong to the peer, and routing nodes are already benefiting from free inbound liquidity if all the funds are on the peer's side. Bastien also stated that allowing routing nodes to set inbound fees would break the routing incentives and lead to unhealthy incentives, such as malicious nodes selectively failing HTLCs. Furthermore, he suggested that the risk of accepting channels from unknown nodes could be addressed by making the opener pay a fee when they open a channel to compensate for that risk.Thomas Huet shared his concern that the proposal would break the current fee structure, which provides incentive to open channels to nodes that receive more than they send. He argued that this incentivizes people to provide liquidity to merchants, thereby making the network more reliable. Joost later corrected a statement about the sum of inbound and outbound fees, stating that path-finding algorithms don't support negative fees, but rounding up to zero is still a quick fix and better than ignoring inbound fees completely.In a discussion on GitHub regarding the Lightning Network, concerns were raised about the lack of balance in network traffic. Specifically, certain nodes receive more than they send, such as merchants, which can lead to a lack of liquidity and failed payments. To incentivize opening channels to these nodes and maintain reliability, the current fee structure rewards routing fees in exchange for onchain fees and locked funds. However, proposed changes to this structure have raised concerns that it could break the incentive and make the network less reliable.One proposed change involves adding inbound fees to compensate for accepting incoming htlc and locking up funds in channels. Some members of the discussion, including Joost Jager, argue that this is fair compensation for the risks associated with accepting incoming funds.
Updated on: 2023-08-01T00:37:38.576966+00:00