Rene Pickhardt not too long ago kicked off a thread discussing the variations between two celebration and multiparty (greater than two individuals) fee channels because it pertains to his analysis work round fee reliability on the Lightning Community. He voices a rising skepticism of the viability of that course for improvement.
The excessive stage thought of why channel factories enhance the reliability of funds comes right 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 a substitute 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 solely one of many design constraints of the Lightning Community identified from the very starting, and why analysis like Rene’s is extremely vital for making the protocol/community work in the long term.
In a mannequin of multiparty channels, customers can allocate liquidity into giant teams and easily “sub-allocate” it off-chain wherever it is sensible to within the second. Because of this even when a node operator has made a poor resolution during which individual to allocate liquidity to, so long as that individual is in the identical multiparty channel with individuals that will be a very good peer, they will 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 might 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 whole logic of Lightning is predicated round the concept in case your single channel counterparty stops cooperating or responding, you may merely submit transactions on chain to implement management over your funds. When you could have a multiparty channel, every “stage” within the stack of channels provides extra transactions that have to be submitted to the blockchain in an effort to implement the present state, that means that in a excessive price surroundings multiparty channels might be dearer than two celebration channels to implement on-chain.
These are core trade-offs to contemplate when these methods in contrast to one another, however I believe focusing completely on the on-chain footprint ignores the extra vital level relating to off-chain methods: they’re all about incentivizing individuals to not go on-chain.
Correctly structuring a multiparty channel, i.e. the way you set up the channels stacked on high, can mean you can pack teams of individuals into subsections which have a repute for top reliability, or who belief one another. This might permit individuals in these subgroups to nonetheless reorganize liquidity inside that subgroup even when individuals outdoors of it should not responsive quickly, or go offline because of technical points. The on-chain value of implementing issues, whereas vital, is form of tangential to the core design aim of an off-chain system: giving individuals a purpose to remain off-chain and cooperate, and eradicating causes for individuals to not cooperate and pressure issues onc-chain.
It’s vital to not lose sight of that core design facet of those methods when contemplating what their future will appear like.
