Without automated LSPs, onboarding millions of everyday users to self-custodial Lightning is practically impossible due to liquidity friction.
It's also partially due to the limitations of the blockchain itself, but it's even more an operational difficulty. Millions of people could hold a utxo, though it might get expensive, 100 million probably not. What blocks people from being first class lightning users is maintaining a bitcoin and lightning node. Lightning's livenes requirement is very non-trivial. So "liquidity friction" - sure, inbound is one chunk, fees are another chunk, maybe some other things. I think the biggest blocker is "operations" if you see what I mean.
However, relying on a few dominant LSPs creates central chokepoints susceptible to regulation, transaction monitoring, and fee gouging.
True, but it's also somewhat like VPN/VPS services. It can be very internationally distributed, and you can route around entities that get blocked. I see it as a concern that would always be ongoing, but not a system weakness. The key thing is to have LSPs and wallet providers keep the infrastructure that makes it possible for users to get their money out when the LSP stops cooperating.
It's also partially due to the limitations of the blockchain itself, but it's even more an operational difficulty. Millions of people could hold a utxo, though it might get expensive, 100 million probably not. What blocks people from being first class lightning users is maintaining a bitcoin and lightning node. Lightning's livenes requirement is very non-trivial. So "liquidity friction" - sure, inbound is one chunk, fees are another chunk, maybe some other things. I think the biggest blocker is "operations" if you see what I mean.
True, but it's also somewhat like VPN/VPS services. It can be very internationally distributed, and you can route around entities that get blocked. I see it as a concern that would always be ongoing, but not a system weakness. The key thing is to have LSPs and wallet providers keep the infrastructure that makes it possible for users to get their money out when the LSP stops cooperating.