Optimal fee structure for efficient lightning networks
Off-chain transaction handling like the Lightning Network (LN) is among the most promising solutions to solve the scaling challenges in blockchain technology like Bitcoin. At the same time, the LN faces its own challenges like transaction path lengths, centralization of channels (hubs), channel imba...
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| Fformat: | Conference Paper |
| Iaith: | English |
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2021
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| Mynediad Ar-lein: | https://hdl.handle.net/10356/146750 |
| _version_ | 1826121421709901824 |
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| author | Heng, Alvin Jun Ren Feng, Ling Cheong, Siew Ann Goh, Rick Siow Mong |
| author2 | School of Physical and Mathematical Sciences |
| author_facet | School of Physical and Mathematical Sciences Heng, Alvin Jun Ren Feng, Ling Cheong, Siew Ann Goh, Rick Siow Mong |
| author_sort | Heng, Alvin Jun Ren |
| collection | NTU |
| description | Off-chain transaction handling like the Lightning Network (LN) is among the most promising solutions to solve the scaling challenges in blockchain technology like Bitcoin. At the same time, the LN faces its own challenges like transaction path lengths, centralization of channels (hubs), channel imbalances (depletion), etc. Here we study the effects of payment channel fees on these various factors. To get realistic insights, we based our study on empirical Bitcoin transaction patterns and existing LN structure, and apply a simple form of fee structure with only one tunable parameter, α, that is most influential on the transaction routing paths. We assume the transactions through the LN take the path of the lowest aggregate fees, and found as a consequence that one cannot have short average path lengths and low overall channel imbalances at the same time. A good compromise is to have fees proportional to the square root of the channel capacity, such that reasonably short path lengths and overall balanced channel capacities can be achieved that makes the operation of the LN more sustainable. |
| first_indexed | 2024-10-01T05:32:22Z |
| format | Conference Paper |
| id | ntu-10356/146750 |
| institution | Nanyang Technological University |
| language | English |
| last_indexed | 2024-10-01T05:32:22Z |
| publishDate | 2021 |
| record_format | dspace |
| spelling | ntu-10356/1467502021-03-11T05:51:30Z Optimal fee structure for efficient lightning networks Heng, Alvin Jun Ren Feng, Ling Cheong, Siew Ann Goh, Rick Siow Mong School of Physical and Mathematical Sciences 2018 IEEE 24th International Conference on Parallel and Distributed Systems (ICPADS) Complexity Institute Science::Physics Bitcoin Blockchain Off-chain transaction handling like the Lightning Network (LN) is among the most promising solutions to solve the scaling challenges in blockchain technology like Bitcoin. At the same time, the LN faces its own challenges like transaction path lengths, centralization of channels (hubs), channel imbalances (depletion), etc. Here we study the effects of payment channel fees on these various factors. To get realistic insights, we based our study on empirical Bitcoin transaction patterns and existing LN structure, and apply a simple form of fee structure with only one tunable parameter, α, that is most influential on the transaction routing paths. We assume the transactions through the LN take the path of the lowest aggregate fees, and found as a consequence that one cannot have short average path lengths and low overall channel imbalances at the same time. A good compromise is to have fees proportional to the square root of the channel capacity, such that reasonably short path lengths and overall balanced channel capacities can be achieved that makes the operation of the LN more sustainable. 2021-03-09T06:22:00Z 2021-03-09T06:22:00Z 2019 Conference Paper Heng, A. J. R., Feng, L., Cheong, S. A., & Goh, R. S. M. (2018). Optimal fee structure for efficient lightning networks. Proceedings of 2018 IEEE 24th International Conference on Parallel and Distributed Systems (ICPADS), 980-985. doi:10.1109/PADSW.2018.8644930 9781538673089 https://hdl.handle.net/10356/146750 10.1109/PADSW.2018.8644930 2-s2.0-85063337658 980 985 en © 2018 IEEE. All rights reserved. |
| spellingShingle | Science::Physics Bitcoin Blockchain Heng, Alvin Jun Ren Feng, Ling Cheong, Siew Ann Goh, Rick Siow Mong Optimal fee structure for efficient lightning networks |
| title | Optimal fee structure for efficient lightning networks |
| title_full | Optimal fee structure for efficient lightning networks |
| title_fullStr | Optimal fee structure for efficient lightning networks |
| title_full_unstemmed | Optimal fee structure for efficient lightning networks |
| title_short | Optimal fee structure for efficient lightning networks |
| title_sort | optimal fee structure for efficient lightning networks |
| topic | Science::Physics Bitcoin Blockchain |
| url | https://hdl.handle.net/10356/146750 |
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