Author: Antoine Riard 2022-11-28 21:34:10
Published on: 2022-11-28T21:34:10+00:00
In a conversation between Antoine Riard and Michael Folkson, the topic of embedding a reputation layer or reputation credentials into the Lightning protocol was discussed. Michael expressed skepticism about this due to the difficulties of managing centralized reputation systems and the potential for attacks. In response, Antoine explained that his proposed credential system is more of a monetary strategy than a reputational one. Node operators would be able to make decisions on credential acquisition costs and expiration heights.Antoine pointed out that there are already reputation systems in place within Lightning, such as routing algorithms that track the performance of routing hops and their liquidity. He provided a detailed description of his proposal and how it could protect against channel jamming and allow HTLC traffic-shaping through reputation credentials. The proposal assumes credentials distribution at the endpoint of the network but can be flexible enough for LSPs to harvest and distribute them in a secondary fashion.Antoine's proposal involves a decentralized credit system for the Lightning Network, which would allow nodes to issue credentials redeemable for liquidity. Blinded signatures would maintain privacy and prevent DoS attacks. Implementation would require modifications to protocol messages and routing algorithms, as well as adaptation of "credentials-to-liquidity" allocation algorithms. The potential impact on routing fees, ratecards, flow-control valves, and the liquidity toolchain must be studied.The proposed framework could be extended beyond jamming prevention to create a generalized risk-management framework for the Bitcoin decentralized financial network. Antoine evaluated his proposal against recent research and found that it is effective, incentive-compatible, transparent, and can conserve high capacity. He encouraged Michael to browse his proposal in more depth and welcome feedback.
Updated on: 2023-06-03T10:51:30.274387+00:00