Author: ZmnSCPxj 2022-10-09 23:26:45
Published on: 2022-10-09T23:26:45+00:00
The Lightning Network is a second-layer payment protocol that allows for fast and cheap transactions on top of the Bitcoin blockchain. However, one issue with rebalancing channel balances between forwarding nodes can result in profiteering nodes exploiting altruistic nodes who set their fees too low. To solve this issue, the forwardable peerswaps proposal has been introduced. Forwardable peerswaps allow forwarding nodes to rebalance two channels favorably without spending anything by accepting and forwarding a forwardable peerswap, which gains the same benefit as a successful rebalance but at zero cost. This effectively forms matchmaking between net senders and net receivers, resetting the state of multiple channels on the network, from net senders to net receivers, and enabling further payment flows involving them and their neighborhood. A limitation of peerswap is that it can only be performed with a direct peer with which you have a channel. The proposed extension to the overall peerswap protocol is called "forwardable peerswap". Compared to the current peerswap, a forwardable peerswap can affect more than just one channel, improving the blockchain space utilization. Each node has the opportunity to decide whether to forward the peerswap or not, depending on the states of its other channels.The article explains that net senders will deplete their on-Lightning funds on all their channels, and if this happens, net receivers will not receive more funds. Forwardable peerswaps will start at net senders and will be naturally pathed to terminate at net receivers, which is an advantage over source-routed forwardable payments. The intermediate nodes do not charge a fee, and any fee offered by the initiator is paid to the ultimate acceptor.The article also discusses the inefficiencies of the "just make a channel" strategy and how liquidity markets aim to make it better. However, there are issues with centralization and censorship with these markets. In contrast, nobody knows who the net receivers are with forwardable peerswaps, so they cannot be filtered out. The article concludes that forwarding nodes have a disincentive to filter out net receivers because they earn fees from the channel with them, and purely forwarding nodes never need to maintain any on-chain funds.There are actually two sub-protocols of peerswap: Onchain-to-offchain and Offchain-to-onchain. Unfortunately, only the first sub-protocol (onchain-to-offchain) is actually forwardable. This is because, in the latter case, the initiator can force the acceptor to waste resources by aborting the protocol after the acceptor has committed onchain funds to the HTLC. Using forwardable peerswaps does not require broadcasting anything, and forwarding nodes do not need to leak their channel balances over the gossip network. Finally, the use of forwardable peerswaps accepts that onchain activity involved in topping up channels will be costly and slow since that is what onchain activity inherently is.
Updated on: 2023-06-03T10:15:11.421599+00:00