Rene Pickhardt lately kicked off a thread discussing the variations between two celebration and multiparty (greater than two contributors) cost channels because it pertains to his analysis work round cost reliability on the Lightning Community. He voices a rising skepticism of the viability of that course for improvement.
The excessive stage concept of why channel factories enhance the reliability of funds comes all the way down to liquidity allocation. In a community of solely two celebration channels, customers must make zero sum selections on the place to allocate their liquidity. This has a systemic impact on the general success price of funds throughout the community, if individuals put their liquidity someplace it isn’t wanted to course of funds as an alternative of the place it’s, funds will fail because the liquidity in locations individuals want is used up (till it’s rebalanced). This dynamic is just one of many design constraints of the Lightning Community recognized from the very starting, and why analysis like Rene’s is extremely essential for making the protocol/community work in the long term.
In a mannequin of multiparty channels, customers can allocate liquidity into massive teams and easily “sub-allocate” it off-chain wherever it is smart to within the second. Which means that even when a node operator has made a poor choice wherein particular person to allocate liquidity to, so long as that particular person is in the identical multiparty channel with individuals that may be a superb peer, they’ll reallocate that poorly positioned liquidity from one to the opposite off-chain with out incurring on-chain prices.
This works as a result of the idea of a multiparty channel is actually simply everybody within the group stacking typical two celebration channels on high of the multiparty one. By updating the multiparty channel on the root, the 2 celebration channels on high will be modified, opened, closed, and many others. whereas staying off-chain. The issue Rene is elevating is the price of going on-chain when individuals don’t cooperate.
The complete logic of Lightning relies round the concept that in case your single channel counterparty stops cooperating or responding, you possibly can merely submit transactions on chain to implement management over your funds. When you might have a multiparty channel, every “stage” within the stack of channels provides extra transactions that should be submitted to the blockchain to be able to implement the present state, which means that in a excessive price setting multiparty channels will likely be dearer than two celebration channels to implement on-chain.
These are core trade-offs to think about when taking a look at these techniques in contrast to one another, however I believe focusing completely on the on-chain footprint ignores the extra essential level concerning off-chain techniques: they’re all about incentivizing contributors to not go on-chain.
Correctly structuring a multiparty channel, i.e. the way you manage the channels stacked on high, can help you pack teams of individuals into subsections which have a fame for top reliability, or who belief one another. This could permit individuals in these subgroups to nonetheless reorganize liquidity inside that subgroup even when individuals outdoors of it are usually not responsive briefly, or go offline resulting from technical points. The on-chain value of imposing issues, whereas essential, is form of tangential to the core design objective of an off-chain system: giving individuals a motive to remain off-chain and cooperate, and eradicating causes for individuals to not cooperate and pressure issues onc-chain.
It’s essential to not lose sight of that core design facet of those techniques when contemplating what their future will seem like.
