Hey ZmnSCPxj It is an interesting topic. Alex Bosworth did a presentation at the Lightning Hack Day last year with a similar attempt at categorizing the different strategies for a routing/forwarding node (Ping Pong, Liquidity Battery, Inbound Sourcing, Liquidity Trader, Last Mile, Swap etc)
https://btctranscripts.com/lightning-hack-day/2021-03-27-alex-bosworth-lightning-routing/ It seems like your attempt is a little more granular and unstructured (based on individual responses) but perhaps it fits into the broad categories Alex suggested maybe with some additional ones? Thanks Michael -- Michael Folkson Email: michaelfolkson at protonmail.com Keybase: michaelfolkson PGP: 43ED C999 9F85 1D40 EAF4 9835 92D6 0159 214C FEE3 ------- Original Message ------- On Tuesday, June 28th, 2022 at 03:34, ZmnSCPxj via Lightning-dev <lightning-dev@lists.linuxfoundation.org> wrote: > Good morning list, > > This is a short (relative to my typical crap) writeup on some strategies that > Lightning forwarding nodes might utilize. > > I have been thinking of various strategies that actual node operators (as I > understood from discussing with a few of them) use: > > * Passive rebalance / feerate by balance > * Set feerates according to balance: increase feerates when our side has low > balance, reduce feerates when our side has high balance. > * "passive rebalance" because we are basically encouraging payments via our > channel if the balance is in our favor, and discouraging payments if the > balance is against us, thus typical payments will "normally" rebalance our > node naturally without us spending anything. > * Low fee > * Just fix the fee to a low fee, e.g. base 1 proportional 1 or even the > @zerofeerouting guy of base 0 proportional 0. > * Ridiculously simple, no active management, no scripts, no nothing. > * Wall > * Set to a constant (or mostly constant) high feerate. > * Actively rebalance, targeting low-fee routes (i.e. less than our earnings), > and constantly probe the network for the rare low-fee routes that we can use > to rebalance. > * Basically, buy cheap liquidity and resell it at higher prices. > > > The interesting thing is how the three interact. > > Suppose we have a mixed network composed ONLY of passive rebalancers and > walls. > In that case, the passive rebalancers might occasionally set channels to low > fees, in which case the walls buy up their liquidity, but eventually the > liquidity of the passive rebalancer is purchased and the passive rebalancer > raises their price point. > The network then settles with every forwarding node having roughly equal > balance on their channels, but note that it was the walls who paid to the > passive rebalancers to get the channels into a nice balance. > In particular, if there were only a single wall node, it can stop rebalancing > once the price to rebalance costs more than 49% of its earnings, so it paid > 49% of its earnings to the passive rebalancers and keeps 51% of its earnings, > thus earning more than the passive rebalancers earn. > However, once multiple wall nodes exist, they will start bidding for the > available liquidity from the passive rebalancers and the may find it > difficult to compete once the passive rebalancers set their feerates to more > than 50% of the wall feerate, at which point the passive rebalancers now end > up earning more than the wall nodes (because the wall nodes now pay more to > the passive rebalancers than what they keep). > > Thus, it seems to me that passive rebalancers would outcompete wall > strategies, if they were the only strategies on the network. > > However, the network as-is contains a LOT of tiny nodes with low feerates. > > In such an environment, walls can pick up liquidity for really, really cheap, > leaving the low-feerate nodes with no liquidity in the correct direction. > And thus, it seems plausible that they can resell the liquidity later at much > higher feerates, possibly outcompeting the passive rebalancers. > > Unfortunately: > > * Low feerate nodes are notoriously unreliable for payments; their channels > are usually saturated in one side or another. since walls keep taking their > liquidity. > * Because of this known unreliability, some payer strategies filter them out > via some heuristics (e.g. payment unreliability information). > Thus, even in the rare case where payment flows change on the network, they > are not used by payers --- instead, walls exploit them since walls do not > care if rebalancing fails, they will always just retry later. > * One argument FOR using low-feerate nodes is that it "supports the network". > * However, it seems to me that the low-feerate nodes are actually being > exploited by the wall nodes instead, and the low-feerate nodes have too > little payment reliability to actually support payers instead of large-scale > forwarders. > * Both low-feerates and walls do not leak their channel balances, whereas > passive rebalancers do leak their channel balance. > > The above is just some thinking of mine --- actual experimentation on models > or on actual network nodes might be better than my speculation. > > Regards, > ZmnSCPxj > _______________________________________________ > Lightning-dev mailing list > Lightning-dev@lists.linuxfoundation.org > https://lists.linuxfoundation.org/mailman/listinfo/lightning-dev _______________________________________________ Lightning-dev mailing list Lightning-dev@lists.linuxfoundation.org https://lists.linuxfoundation.org/mailman/listinfo/lightning-dev
