Will Lightning Network lead to the centralisation of LSPs? \ stacker news ~bitcoin

Will Lightning Network lead to the centralisation of LSPs?

3902 sats \ 19 comments \ @Sovereign_Matt 30 Oct 2023 bitcoin freebie

Many people are saying LSPs are a massive centralisation risk in the long run. Do you agree with that? ~Marty Bent

“Yes, it kind of is,..., there are valid centralisation concerns. But if we dont build it, no one is going to use lightning because the lightning user experience sucks ass.”~Matt Corralo

Link to Youtube Timestamp:

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3011 sats \ 7 replies \ @supertestnet 30 Oct 2023

LSPs by definition cannot centralize the lightning network. Centralization is a matter of control. LSPs do not control user funds, the only thing an LSP can do is choose to serve you or not. If they choose not to, just don't use that LSP.

Do not confuse popularity with centralization. They are not the same. A popular service that has no control of your funds or your actions is not a central point of failure even if most people use it. If the most popular LSP in the world begins censoring certain transactions, even that doesn't make it centralized. It is just a signal on the network that there is demand for a new service provider, an uncensored channel to whatever destination the "bad" LSP tried to censor. Anyone can create that connection point easily, so LSPs effectively have no power.

0 sats \ 6 replies \ @Sovereign_Matt OP 30 Oct 2023

So eventually anyone with excess liquidity will be able to become a LSP?

And LSPs are safe from government regulatory capture?

Thank you for your answer Super_Testnet. I am big fan of your work!

2009 sats \ 5 replies \ @supertestnet 30 Oct 2023

So eventually anyone with excess liquidity will be able to become a LSP?

Yes except the word "eventually" makes it sound like a future reality when it's really a present one. Go be an LSP right now if you want to. It's never been easier. If you feel like there's an obstacle in your path, what is it? I'm happy to help you overcome it.

And LSPs are safe from government regulatory capture?

They can't stop us all

What's nice about being an LSP is, you make money by doing it

The government can't even stop bittorrent and that's just anonymous movie downloads

Imagine them trying to stop anonymous payment routers whose income is on the line

0 sats \ 1 reply \ @Sovereign_Matt OP 31 Oct 2023

This video of by the creator of ARK is what led to my misunderstanding. Timestamp.

1793 sats \ 0 replies \ @supertestnet 31 Oct 2023

He seems to say in that video that lightning can only scale if LSPs become professional services run by very wealthy people

He's probably right, but (1) we're far from hitting lightning's scalability limits right now, there's plenty of time right now to run an LSP on a hobby node (2) even once that tipping point arrives I still think it's important that anyone be able to run LSP software. Your LSP service might not be popular in a future where professionals dominate the scene, but popularity is not the only important thing in this world.

For me, freedom is key. I don't want to be beholden to professionals. I want to run an LSP locally, for my friends. If that doesn't earn me thousands of dollars per month from massive scale and usage, fine. I'm not asking for that. I just want freedom, and since I can build it myself, I don't really need to ask anyone for that. I'll just do it, and invite others to join me if they want to.

0 sats \ 2 replies \ @Sovereign_Matt OP 31 Oct 2023

Whats stopping me becoming a LSP?

I don't really have much liquidity on lightning to provide. I just have some sats for nostr which I play around with for fun micropayments.

Thanks again. My misconception was becoming a LSP required a certain level expertise and setting up commercial enterprise almost to be compliant as I saw becoming a LSP as entrepreneurship type venture.

0 sats \ 1 reply \ @Sovereign_Matt OP 31 Oct 2023

So becoming a LSP is similar to NOSTR. Anyone can run their own relay making it permisionless in that sense.

2216 sats \ 0 replies \ @supertestnet 31 Oct 2023

Yes, you can be an LSP by just running some software -- and it is profitable to do so.

The first time I wrote LSP software was probably Swap Service which lets you do what Boltz Exchange does except you make the money instead of them. More recently, I revised that code and released Zaplocker, which is partly the same thing, but it also has new features e.g. it works for lightning addresses and lets people have a non-custodial one without needing to run a node. (Zeus Pay runs an instance of zaplocker software as well, though Evan rewrote the codebase because my code is bad.)

One of my goals is to make third party intermediaries unnecessary. Another of my goals is to make them as widely available as possible. Those might seem contradictory, but I don't see it that way. Some people want to use third parties for some services, and that's fine, but I'd like that to be an option rather than a need. For those who want third party services, even non-custodial ones like zaplocker come with some risks, such as being deplatformed, but these risks are mitigated if everyone can run a copy of that same third party service. So, making LSP software serves the latter goal: let anyone be an LSP, let a thousand flowers bloom, make it profitable for anyone who wants to give it a try, and that helps LSPs in general evade regulatory capture.

1335 sats \ 3 replies \ @k00b 30 Oct 2023

LSPs are by definition centralizing lightning operations. If the protocol continues to require them to meet UX expectations, then the average lightning experience will only ever be as decentralized as LSPs.

Given that software progress isn't static, you can expect more LSPs to emerge, more LSP implementations to emerge, and LSPs to be interchangeable ... all of which is actively happening. You can also expect the lightning protocol and nodes to absorb functionality provided by LSPs over time, as LSPs are kind of front running the needs of protocol users, and for the functionality of LSPs to eventually be provided piecemeal.

Lightning is software. It can change for good and for bad. If we don't like it one way, we'll try to make it another way. The biggest centralization risk is becoming complacent with centralized solutions.

803 sats \ 1 reply \ @elvismercury 30 Oct 2023

What I'd expect is that the majority of activity to be unfolding in these relatively "centralized" lightning enclaves, which are nicer and easier to use; but for (less-nice * less-centralized) versions to continue to exist, and that the latter will be useful in keeping the former honest, and for keeping them from getting cracked down on, mostly. Thoughts?

(This is the same logic that convinces me that shitcoins will be around for the long haul, bc the existence of btc provides cover for them. The government is like: "Even if we crack down on Eth / Solana / Tron / XRP, there will still be btc, which we can't realistically crack down on using these same tools; so we might as well not really try until we're ready to go all the way.")

435 sats \ 0 replies \ @k00b 30 Oct 2023

I think that's right on both fronts. LSPs are kind of the technological event horizon and are centralized as is the usual case even with technology destined for decentralization. Theoretically, you're not trusting an LSP (financially) more than a normal lightning peer, so LSPs should mostly compete on service quality. This should lend itself to a robust-ish LSP-dominated hub and spoke network even if it isn't the mesh network ideal. The cheaper and easier lightning nodes become to run, the less LSPs are needed. Lightning nodes are just not cheap and easy to run right now.

724 sats \ 0 replies \ @mixmaster 30 Oct 2023

Right, things change fast. Zeus as an example works with 2 different LSPs: OLYMPUS by Zeus (https://0conf.lnolymp.us) and Voltage (https://lsp.voltageapi.com). Users can decide and switch as they like.

560 sats \ 0 replies \ @Louferlou 31 Oct 2023

Honestly, I'm not sure if these criticisms toward LN centralization are entirely true because they forget that even today, with Big Tech's natural monopolies and states leveraging these advantages to censor, you can still find everything on the internet because some people value their freedom more than a perfect user experience. And then they use VPNs, Tor, and more. If there is a market for information to flow freely across the web, you can be sure that there will be an immensely larger market for money circulating freely across the web, creating huge incentives for unregulated LSPs to pop up.

I'm trying the Electrum LN wallet right now, one among many to come, and it works really decently. You can already choose between some LSPs for Trampoline routing. Once blinded paths are implemented to gain more privacy with these LSPs, you can imagine some functionalities implemented in wallets like Electrum to open a batch of channels (in one single transaction to save fees a bit) with some popular Trampoline routing nodes. If one attempts to censor your transaction, you could use splicing to easily move your funds to another channel.

What's certain, on the other hand, is that we'll see a fork between regulated and unregulated networks, and the doors between the two will be hard to cross. Only criminals involved in money laundering operations will manage to get their "dirty" satoshis circulating on the regulated network of these areas

So in the end, if LN succeeds, it will undoubtedly be heavily regulated, but money will continue to flow at the speed of light between freedom seekers, from heavily regulated jurisdictions to less heavily regulated jurisdictions, without the possibility of seizure, capital control, or theft by inflating the money supply. It's more a split of networks problem, than a centralization problem when it comes to open protocols IMO

340 sats \ 0 replies \ @TonyGiorgio 30 Oct 2023

As we move to an open LSP standard, which is currently in progress, it shouldn't be a problem. If there's hundreds of potential LSPs then that's in fact the opposite of centralization.

240 sats \ 1 reply \ @jgbtc 31 Oct 2023

Lightning UX isn't that bad. In fact I'd say it's pretty good.

0 sats \ 0 replies \ @Sovereign_Matt OP 31 Oct 2023

Compared to a simple onchain transaction, I 100% disagree.

10 sats \ 0 replies \ @Zepasta 30 Oct 2023

Waiting for DarthCoin

100 sats \ 0 replies \ @lightwalker 31 Oct 2023

Anyone can choose which LSP to use, and Anyone can become a LSP. So, centralization is not a concern at all.

0 sats \ 0 replies \ @nicosey 31 Oct 2023

Miners somewhat centralised. Was it the end of bitcoin?