Author: ZmnSCPxj 2022-09-28 02:07:51
Published on: 2022-09-28T02:07:51+00:00
In this message, ZmnSCPxj discusses the behavior of forwarding nodes in the Lightning Network. The nodes aim to maximize profit by selling liquidity, and if they run out of stock, they earn no profit. Rebalancing is a strategy where forwarding nodes buy cheaper liquidity to resell it at a higher price. This can occur at any time and is likely to happen before payment requests since payments need someone interested in purchasing a product. Therefore, channels advertising low fees are likely to have their liquidity bought out by patient forwarding nodes. ZmnSCPxj suggests that any "payment size distribution" can be manipulated by forwarding nodes to buy out cheap liquidity and drain a channel anyway. Fees being paid by out-of-band means are also likely to fail because forwarding nodes will exploit that and do a hostile takeover of the cheap liquidity. The author believes that rebalances cannot be differentiated from payments unless you force publication of source and destination. However, even if forced, people can lie about the real source and destination. In conclusion, the invisible hand wins in the Lightning Network.
Updated on: 2023-06-03T10:00:30.641643+00:00