Rene Pickhardt just lately kicked off a thread discussing the variations between two social gathering and multiparty (greater than two individuals) 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 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 should make zero sum decisions on the place to allocate their liquidity. This has a systemic impact on the general success charge 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 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 that even when a node operator has made a poor resolution wherein particular person to allocate liquidity to, so long as that particular person is in the identical multiparty channel with individuals that will be a great 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 basically simply everybody within the group stacking standard 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 could be modified, opened, closed, and so forth. 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 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’ve got a multiparty channel, every “degree” within the stack of channels provides extra transactions that should be submitted to the blockchain to be able to implement the present state, that means that in a excessive charge surroundings multiparty channels will probably be costlier than two social gathering channels to implement on-chain.
These are core trade-offs to think about when these methods in contrast to one another, however I feel focusing completely on the on-chain footprint ignores the extra essential level concerning 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 prime, can help you pack teams of individuals into subsections which have a fame for prime reliability, or who belief one another. This might enable individuals in these subgroups to nonetheless reorganize liquidity inside that subgroup even when individuals outdoors of it aren’t responsive quickly, or go offline on account of technical points. The on-chain price of implementing issues, whereas essential, is form of tangential to the core design aim of an off-chain system: giving individuals a cause to remain off-chain and cooperate, and eradicating causes for individuals to not cooperate and drive issues onc-chain.
It’s essential to not lose sight of that core design facet of those methods when contemplating what their future will appear like.
