Rene Pickhardt not too long ago kicked off a thread discussing the variations between two social gathering 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 path for growth.
The excessive degree concept of why channel factories enhance the reliability of funds comes right down to liquidity allocation. In a community of solely two social gathering channels, customers need to make zero sum decisions on the place to allocate their liquidity. This has a systemic impact on the general success fee of funds throughout the community, if folks 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 folks 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 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 sensible to within the second. Which means even when a node operator has made a poor determination wherein particular person to allocate liquidity to, so long as that particular person is in the identical multiparty channel with folks that might be an excellent 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 social gathering channels on prime of the multiparty one. By updating the multiparty channel on the root, the 2 social gathering channels on prime might be modified, opened, closed, and so on. whereas staying off-chain. The issue Rene is elevating is the price of going on-chain when folks don’t cooperate.
All the 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’ve got a multiparty channel, every “degree” within the stack of channels provides extra transactions that should be submitted to the blockchain with the intention to implement the present state, which means that in a excessive price surroundings multiparty channels can be dearer than two social gathering channels to implement on-chain.
These are core trade-offs to contemplate when these techniques in contrast to one another, however I believe focusing solely on the on-chain footprint ignores the extra essential level relating to off-chain techniques: 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 prime, can permit you to pack teams of individuals into subsections which have a popularity for prime reliability, or who belief one another. This is able to enable folks in these subgroups to nonetheless reorganize liquidity inside that subgroup even when folks exterior of it will not be responsive quickly, or go offline as a consequence of technical points. The on-chain value of implementing issues, whereas essential, is form of tangential to the core design aim of an off-chain system: giving folks a cause to remain off-chain and cooperate, and eradicating causes for folks to not cooperate and pressure issues onc-chain.
It’s essential to not lose sight of that core design side of those techniques when contemplating what their future will appear like.
