Increasing fee defaults to 5000+500 for a healthier network?

Summary:

In a recent email thread on the Lightning-dev mailing list, Rusty Russell proposed changing the default routing fees for new channels to 5000 msat + 500ppm. The current default is 1000 msat + 1 ppm and over two-thirds of nodes are still using it, which Russell believes is causing problems because low fees are now seen as an indication of lower reliability. He argues that there is no meaningful market signal in fees because you can’t drop much below 1 ppm. In support of his proposal, Russell points to lightningpowerusers.com, which charges 10000 msat + 5000 ppm and has significant usage, suggesting a market tolerance for higher fees.However, Olaoluwa Osuntokun expresses concern about making sweeping changes to default values like fees, arguing that this could promote the notion that developers decide on fees. He also believes that there is no meaningful market signal in fees yet because a true market hasn't emerged as routing node operators are mostly hands off and have yet to begin factoring in the various costs of operating a node into their fee schedules.Osuntokun suggests that rather than preemptively raising defaults, the network should focus on educating prospective routing node operators on best practices and providing analysis tools they can use to make channel management and liquidity allocation decisions. This will promote a healthier network and leave it up to the market participants to converge on steady-state economically rational fees.Osuntokun also addresses some flaws in Russell's reasoning behind his proposal. For example, defaults don't necessarily indicate higher or lower reliability, and issuing a single CLI command to raise or lower fees on one’s node doesn't magically make the owner of said node a better routing node operator. Additionally, the fees on lightningpowerusers.com are only that high due to user error by the operator when setting their fees, and having numerous channels doesn't necessarily mean that they have significant usage.Overall, Osuntokun argues that the network is still too young to derive any meaningful observations around a routing fee market. This will become clearer though as more routing tools and analytics are created for routing node operators as well wallet users.

Updated on: 2023-06-02T20:56:42.884768+00:00