"Economically irrational": Study reveals deficiencies in the Lightning network
"Network participation is economically unreasonable for the majority of the large routing nodes that currently hold the network together. Either the traffic or the transaction fees have to increase many times to make the payment routing economical. "
This is the damning conclusion of a study carried out by scientists from three different Hungarian institutes. The study titled "A Cryptoeconomic Traffic Analysis of Bitcoin's Lightning Network "deals with what the name implies: the economic viability of the Lightning network. Specifically, the paper was about the results of a simulation that computer scientists conducted using public Lightning data.
For the study, the authors have taken advantage of a so-called traffic simulator. It is a tool that can be used to test lightning routing with more or less large payment traffic. Above all, the scientists are interested in whether the operation of a routing node makes economic sense.
Running Routing Nodes does not pay for itself
Routing nodes are an "essential part of Lightning," says the study. Finally, they are responsible for processing payments. For the provision of liquidity, the node operators usually branch off a small fee, which they should compensate for their services.
However, as the paper shows, these fees do not seem to remunerate for costs incurred. In other words, running a routing node is not worthwhile.
Specifically, this means: According to the content of the study, there is currently a single node that can operate profitably. Only rompert.com can therefore achieve a sufficient turnover – and only because their fees are well above the market average. As the authors write, rompert.com charges fees for processing LN transactions that are similar to those of first-layer transactions.
However, according to the authors, this fact undermines the value proposition of the Lightning network. After all, from the beginning it was designed to keep transactions as cheap as possible. In contrast to rompert.com, routing nodes such as LNBIG.com only charge fees of only 0.2 percent of the transaction volume. In a transaction of 60,000 Satoshi therefore only 200 satoshi were charged as a fee.
Accordingly, only a significant increase in fees or overall payment transactions in the network could remedy the situation.
Despite Union Routing, we find that strong statistical evidence can be gathered on the sender and recipient of LN payments, as a significant proportion of payments involve only a single router that can easily de-anonymise subscribers.
However, according to the 21-page study, this vulnerability is easy to circumvent: users could consciously choose to choose longer routing channels. With the side effect that payments are slower, but less easy to trace back.
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