Original title: LIGHTNING IS DOOMED
Original author: Shinobi
Original compilation: Luccy, BlockBeats
Editors Note: As of October 16, 2023An emailMentioned in the article are the risks of fund loss faced by Lightning Network channels. These risks are mainly caused by problems in the transaction pool. Shinobi, a self-taught educator in the field of Bitcoin, breaks down some of the challenges and issues in the Lightning Network, especially those related to high fees, transaction confirmations, and double spends.
Shinobi offers some thoughts on the future development of the Lightning Network through a review of the original white paper and a detailed analysis of the network architecture and potential issues. He thinks people’s expectations for the Lightning Network are like wanting to buy coffee on-chain at affordable rates, which is exactly like trying to squeeze a square wedge into a round hole. Although the Lightning Network will reach a dead end in terms of its scalability limitations, that does not mean that the Lightning Network has failed, but that it can, like the blockchain itself, become a settlement layer for other things to be built on top of. a part of.
The Lightning Network is doomed. The high fees from Ordinals have killed all hope of scaling Bitcoin in a non-custodial way, leaving little opportunity for people to affordably open channels or execute pending payments on-chain if necessary. Its all over and everyone can pack their bags and leave. Now its time to shop around and decide which platform, Coinbase or Cashapp, is better suited for our Bitcoin needs, since in a high-fee environment we can no longer operate directly on-chain.
It was a great time. Well always have those pixelated pictures of private parts on the Lightning Art site, and that lightning torch meme from a time when everyone was afraid to send it to a country where only bad people were the only ones. Lightning payments from one escrow account to another. We are about to enter the era of enclosed gardens!
If you think I mean what I say above and agree with it on any level, then go look yourself in the mirror and slap yourself in the face.
Remove gaslight smoke
The original Lightning Network white paper clearly stated in the conclusion that in order for 7 billion people around the world to open two channels every year, Bitcoin would need 133 MB blocks.
Section 9 of the white paper is titled “Risks,” and this full chapter details all the major issues and reasons why Lightning Network is believed to be “doomed” due to high fees. The first section of the paper discusses time lock windows. Improper time locks are actually the dynamics between rates and confirmation times that have attracted great attention recently. When you make a payment over the network, you can define a success path based on a hash-locked preimage, and a withdrawal path based on a refund timelock window. If fees become higher, the refund timelock window needs to be longer in order to ensure that preimage spends (transaction successes) do not fail to confirm before the refund transaction becomes spendable.
That is, if you must confirm a successful payment on-chain, the timelock on the refund path must be long enough so that you can confirm the successful payment path before the other party requests funds through the refund path. As rates go up, this timelock window needs to get longer, because the higher the rate, the lower the transaction fees may be for closing transaction decisions for pre-signed channels beforehand, so that confirmations arent as fast as when you sign them ahead of time. As fast as expected.
Many people are very nervous about this development, as if this is some new realization that spells the doom of the Lightning Network. In fact, this was a risk in the first version of the Lightning Protocol that was explicitly described in the original white paper. It even explicitly describes the opportunity cost trade-off from an economic perspective: “There is a trade-off between longer time locks and the time value of money.”
The next section is called Forced Expiration Spam and describes the general concepts of flooding and looting attacks. If the rate is too high, it is possible for a refund transaction to successfully double-spend a path transaction in a situation that requires something to be performed on-chain, and then an adversary, in order to take advantage of this, will open a large number of channels and close them all on-chain at once. If you have a large number of channels in the process of paying, and you close them all at once and push the fees high enough, then each channel counterparty must confirm the successful payment on-chain if the fees are pushed high enough to allow timelock transactions Before successful transactions with preimage are confirmed and become valid, they may find themselves in a double-spend race.
If you open enough channels and push the fees high enough, you can make a profit. This is actually described in the white paper as an architectural concern. In various white paper versions, this type of attack was described between 2015 and 2016, but it was not until 2020 that it was formally modeled and introduced into the news cycle in this area.
The white paper describes data loss scenarios where the loss of pre-signed closing transactions and penalty keys for old states would allow a malicious channel counterparty to steal your funds without realizing it. It mentions the inability to broadcast penalty transactions, as well as the potential for surveillance towers to act as third parties being paid to observe the blockchain and submit those transactions on your behalf. The white paper explicitly describes miner censorship of channel penalty transactions as a risk and recommends miner anonymization (and, by implication, decentralization) as a mitigation for this risk.
But these are new perspectives. The Lightning Network was doomed because no one saw these problems coming.
This is blockchain for you idiots
Well, I guess we can just admit that we have lost the historical context, we have lost our rationality, we have lost our logic. We live in a reality where we pretend that history’s warnings don’t exist, that no one has pointed out the obvious problems we are destined to face in the future, that this is all completely uncharted territory, and that no one has ever thought about how things will turn out.
What is the title of Section 9.6? The necessary soft fork cannot be made.
The original white paper clearly identified the risks to the success of the Lightning Network from failing to coordinate soft forks. Are you surprised? Have you never read it before? Personally, I had a feeling of déjà vu.
I remember years ago a large group of Bitcoin supporters screaming that the blockchain itself was reaching scaling limits and that unless we fundamentally changed the nature of the systems decentralization trade-offs, it would fail. Blockchain is fundamentally useless if people cant submit all transactions directly and have them confirmed affordably.
The entire foundation of the Bitcoin ecosystem was shaken to its core when people started debating the economies of scale of blockchain, which was actually the entire reason for the block size war. Whats at the heart of this chaos? People’s expectations for what role blockchain will play in Bitcoin’s growing ecosystem. Everyone will buy coffee on-chain at affordable rates, otherwise Bitcoin is a complete failure.
People with this mentality have completely misjudged the entire situation. They were trying to fit a square wedge into a round hole. This is exactly the same situation with the Lightning Network.
square wedge, round hole
Peoples judgment of blockchain is actually a serious misjudgment, that it is just a place where channels are opened and closed, not a place to buy coffee. However, it’s almost impossible to misjudge the Lightning Network, which is definitely where coffee payments are placed. See how ridiculous it sounds when you say that in the right context? The Lightning Network has issues with forcing on-chain payments, which is a problem if the value of the payment is less than the fee to submit the transaction to the chain. Trying to enforce it on-chain doesnt make economic sense, and this is a very well-known problem. In essence, this is pretty much the same problem as low-value payments happening directly on-chain, except in the optimistic case things work as normal because people cooperate off-chain. But problems arise when they dont cooperate.
The problem is so well known that there was a lot of debate years ago about solving it, involving different trade-offs, subcontracting payments. If HTLC is too small to be enforced trustlessly on-chain, you can stream payments sat by sat (or larger blocks of sats) in a trustworthy way if someone at a certain hop decides to steal from you one sat, then stop the flow and choose another route. The idea is that while it is a trusted payment mechanism, you can only lose a tiny bit of sats in the channel for on-chain payments, and if someone steals from you while paying, you simply never go through those again nodes for routing. This quote is from 2019, but the idea was discussed long before that.
The Lightning Network has a problem! And for this problem, most readers have probably never heard of a solution. All these issues that people seem to think the sky is falling on have been well understood since the beginning of the Lightning Network. This begs the question: Are we wrong again?
Not wrong in the sense that the Lightning Network is doomed, but wrong in the sense that the Lightning Network wont be as long-term as we initially thought, just like the blockchain itself. Weve seen the Lightning Network become dominated by hosted applications, and people are working to deploy something specifically designed to sit on top of the Lightning Network. At first glance, Chaumian ecash mint, Uncle Jim setup like LNBits, people have escrow accounts on someones lightning node. We even have proposals like Ark being built in Liquids proof-of-concept phase, which can interact atomically with Lightning payments.
What if Lightning Network doesn’t become the killer protocol for consumers to interact directly with to make payments online? What if, like the blockchain itself, it ends up just being part of the settlement layer that other things are built on top of?
Will that be the end of the world? Will that be the failure of Lightning Network? I think absolutely not. From the very beginning of Lightning Network development, its scaling limitations were evident. The white paper actually mentions that future required soft forks are not supported as a limiting issue in the potential scalability of the Lightning Network. That is by no means the end of the world, nor is it the failure of the Lightning Network.
The Lightning Network is proving that it can serve as an interaction layer between different custodians, and it works very smoothly and efficiently in this regard. There is absolutely no reason to think that the Lightning Network cannot function as a similar connectivity layer for other second layers with a superior trust model than explicit hosting. If channels arent something that individuals can be cost-effective for their day-to-day spending activities, that doesnt mean they wont be cost-effective for LSPs running new protocols outside of Lightning and connecting to each other, allowing their users to interact with each other. Arks, Statechains and any new ideas people develop in the next few years.
It can become a translation layer for other systems, expanding the ability of end users to onboard and transact on these layers, much like we finally realize blockchain will have to become. There is nothing wrong with this.