Lightning Network: Successful routing decreases rapidly as the amount increases
After the Lightning Network has been spreading for about five months, analysts pull the first interim balance sheets. The result could be sobering: the routing between two random nodes is extremely unreliable, especially with larger amounts, and significant centralization tendencies are already apparent. But there are different ways to interpret it.
Since the first Lightning nodes went to Mainnet in mid-February, the network is growing rapidly. Today, there are already more than 2,500 lightning nodes, the 7,800 channels with a total capacity of almost 130,000 euros. With first apps like Satoshis.Place or the Candy Dispenser, the noticeable excitement at the Lightning Hackdays and more and more applications in wallets and companies Lightning has powerful tailwind.
One might think that the network of payment channels has already solved the scaling problems of blockchains by simply processing payments offchain, so that they never come into contact with the blockchain, but still offer their security.
Growth of nodes and channels in the Lightning network since February.
A recent analysis is a bit more sobering. A short article in the latest edition of Diar looks at the current status of the Lightning network. One of the values that the authors scrutinize is the chance of success sending a payment of a given size between two random nodes. The challenge is that the node must send a route to the receiver, which leads through various intermediate nodes, each of which must have a sufficiently covered channel (more about channeling in the Lightning network). This is made more difficult by the fact that the node does not know exactly what liquidity is available in the channels and that it can constantly change (more on that in the Lightning FAQ for advanced users).
Weak performance on non-tiny payments
The data for this was not created by Diar himself, but summarized by a user name YeOldDoc based on the Recksplorers and published seven days ago. They show quite clearly that "the reliability of successfully routing payments over the Lightning network remains fairly weak, especially for larger sums. The chance of winning a dollar between two random Lightning nodes is only 70 percent. "
Chance to find a route between two random nodes, staggered by amount
Some cornerstones: A 100 percent chance of success only have amounts below 3 cents. From about 5 euros, the probability of finding a route to less than 50 percent, and who wants to send more than 50 euros, comes through with only a 10 percent probability. For a payment system that is relatively little, especially considering that bitcoin prices are not stable.
For example, YeOldDoc commented on the analysis 7 days ago that "the probability of successfully paying a coffee (about 0.0004 BTC) between two random peers is about 48 percent." Since the BTC price has dropped since then If this were a very cheap coffee today (2.09 euros), the chance of paying for a cappuccino in a café should be even lower.
Although the different data, charts and interpretations differ slightly from each other, but one thing is clear: Lightning is currently only suitable for real microtransactions. Emin Gün Sirer, Blockchain researcher with a penchant for dramatic diagnoses, comments on Twitter: "We are currently seeing some of the emerging properties of LN. In the last five months, the number of routes has increased tenfold, but the likelihood of finding a route has not increased at all. The probability of failure does not seem to scale. "
Not surprising but not tragic
However, according to the lead developer of Lightning Labs, Olaoluwa Osuntok, the analysis is flawed. They fail to sort out Lightning Channels that do not support larger transactions than a certain amount, he explains TheNextWeb. "If you look at how the Lightning network really works, it's like saying that a room that fits 10 people is capable of holding 50 people would be 0." The results of the model are extremely skewed, "because they contain nonsensical data points."
Jeff Gallas, who runs Hacking with Fulmo Lightning, does not comment on the method, but does not share Diar's worries. "Lightning works fine, especially for microtransactions like Satoshis.Place or the Candy Dispenser, but also for the famous coffee. That's about it: offchain for small transactions, onchain for big. "Jeff is confident that Lightning will work reliably in the future even for larger payments:" Currently, the developers are advised not to put too much money into a channel, because the software is still very beta. Therefore, it is not surprising that large payments are not optimal. "But this will probably change in the future.
Centralization for decentralization
But the analysis on Diar points to a second criticism of the state of Lightning: the centralization of the hubs. "The lack of liquidity between the hubs, as well as the problem of having a node always online, has meant that capacity is concentrated on a few nodes. The ten largest Lightning nodes account for 0.4 percent of all nodes, but currently account for 53 percent of the total capacity, while the remaining 99.6 percent of the nodes have only 47 percent of the capacity. "
The ten largest Lightning nodes and their capacity in Bitcoin. Source: Diar.co.
The Lightning network is a lot, but not decentralized. There seems to be a structural tendency to centralize to large hubs, some of which has already been predicted.
However, Jeff Gallas does not find that necessarily bad either: "The capacity of a node does not necessarily mean that it also has so many bitcoins. Bitrefill, the largest-capacity hub, accepted large-scale voucher card payments early on, which is why many people open a channel with it right in the beginning. Of course, this increases its capacity. But that does not mean that he has power over the users. In the worst case, he goes offline. Then the channels are closed, people get their money back and make new channels with other hubs. "
Centralizing to Lightning, one could say, is easy to get over, as long as the base layer of Bitcoin, the Blockchain remains decentralized - and as long as the centers in Lightning have little opportunity to abuse their status in the network. However, Diar fears that the big hubs will be considered and regulated by the Financial Regulator as a financial services provider. The Journal relies on a commentary by Bitcoin evangelist Andreas Antonopolous, who predicted in January that large companies will not run Lightning nodes because they are required to implement anti-money laundering rules, which is unlikely or not at all with Lightning possible.
However, it is abundantly unclear to what such rules the hubs would commit or could, as it remains nebulous, on which legal basis Lightning hubs can be regulated. The analysis shows that the structure of the Lightning network is probably not optimal for everyone - but it forgets to mention that all problems that show up on Lightning leave the blockchain of Bitcoin untouched. Even if Lightning becomes extremely centralized, this helps maintain Bitcoin's decentralization.