Is it a problem that lightning is so cheap to use? \ stacker news ~polls

Is it a problem that lightning is so cheap to use?

3718 sats \ 23 comments \ @needcreations_ 13 Dec 2023 polls

Considering node runners must currently pay $5-10 to open and close channels, yet most only earn fractions of a penny with each transaction they route...node running isn't profitable so there isn't much of an incentive for plebs to run one. And it is only going to get more expensive to open and close channels.

Yes, this is a problem20.5%

No, this is not a problem 79.5%

39 votes \ poll ended

view all related items

2260 sats \ 1 reply \ @netstatic 13 Dec 2023

Discussing things in dollar denominations is not useful to this kind of analysis. If Bitcoin goes up in USD value, so will the routing fees so dollar value is irrelevant. Instead the question to ask is whether fees are too small with respect to the fee rate needed to open/close channels and the payments that are made.

The answer to that question depends on a number of different factors like how long the routing node is intended to be up (which impacts whether the opening/closing fees make you net negative), the time dedicated to the maintenance of the node (a form of labor cost), and the proportional risk of each payment potentially jamming your channel (which you should get compensated for).

Personally, I don't think this is a problem until we see a significant amount of the network force-closing and/or a dramatic decrease in channel openings. Fee mechanics are still really important and I think not adjusting some of these models can result in problems in the future though.

0 sats \ 0 replies \ @needcreations_ OP 13 Dec 2023

thanks for your input here. Lots to consider that I have never considered! Fee rate is going to get NUTS when adoption moves from 0.1% (where it is now) to say 5 or 10%. Not to mention BitVM (which I am still learning about)...when BitVM is fully operational the game will theoretically change...smart contracts fully enabled on Bitcoin means absolutely no need for other protocols. The base layer will be so highly sought after I think fees will go parabolic.

503 sats \ 0 replies \ @anon 14 Dec 2023

The best reason to run your own lightning node is so you can make cheap private payments in high fee environments. In which case, who cares if you don't earn money from routing.

174 sats \ 1 reply \ @nicosey 13 Dec 2023

Long term it will be profitable or the network will fail. Realistically it will happen. This is like the early days of bitcoin mining...

0 sats \ 0 replies \ @needcreations_ OP 13 Dec 2023

interesting perspective, thanks!

74 sats \ 1 reply \ @nullcount 13 Dec 2023

Its also not profitable to own a car. You make a huge investment, pay for use and maintenance. Using the car puts your life at risk. Some will make profit by working on/renting/flipping cars, but most are not interested in cars for their ability to produce income or yield. Its an investment that gives intangible returns that are well worth the risks for many.

What is the value of not having to pay onchain fees for every payment? What is the value of instant settlement when the alternative is to wait for 10+ minutes for confirmation?

0 sats \ 0 replies \ @needcreations_ OP 13 Dec 2023

Well said! I agree with you 100%

43 sats \ 1 reply \ @C_Otto 13 Dec 2023

I wouldn't say that running a routing node isn't profitable. It's not easy, and it's not something you can do using a "fire and forget" approach. Users on the LN are willing to pay fees, though.

0 sats \ 0 replies \ @needcreations_ OP 13 Dec 2023

very true!

20 sats \ 0 replies \ @r3drun3 13 Dec 2023

Minimizing dependence on third parties is a strong enough incentive for running my own Bitcoin + Lightning node.

20 sats \ 2 replies \ @kepford 13 Dec 2023

There is this thing called a free market that solves it if it is a problem. The problem is solved by node runners raising fees. Right now many runners like me are running at a loss.

0 sats \ 1 reply \ @needcreations_ OP 13 Dec 2023

good point. I too believe we will collectively need to raise fees

20 sats \ 0 replies \ @kepford 13 Dec 2023

Don't get me wrong. I am choosing to set my fees low. Privacy and sovereignty are not free.

12 sats \ 1 reply \ @SimpleStacker 13 Dec 2023

Here's another perspective: it's never going to be easy to do anything profitably. That's basic economic theory.... if something were profitable, the resources used to do it would be bid up, or someone will put extra time into doing it better, etc, in such a way that it will never be as easy to plug and play and make a profit on anything.

So in my mind, it being hard for an amateur to make a profit routing lightning nodes is not the problem. The question is whether the barriers to entry are low enough and whether the incentives are properly set up so that the network can remain reasonably decentralized... or even if it's centralized, that if a central player behave badly, it's easy enough to switch to someone else.

10 sats \ 0 replies \ @needcreations_ OP 13 Dec 2023

good point. lots to think about (as always) haha #bitcoin

10 sats \ 0 replies \ @justBrian 13 Dec 2023

Running a node only needs to be profitable if the only value you get from it is routing profits. I run a well connected node for myself and several friends and we all use the node to make and receive purchases. The routing fees arent 0 but its not where we derive value from the node.

0 sats \ 1 reply \ @nkmg1c_ventures 13 Dec 2023

Problem like a fox

0 sats \ 0 replies \ @needcreations_ OP 13 Dec 2023

hmmm I'd love to hear what this means

0 sats \ 0 replies \ @OT 13 Dec 2023

It might be more of a business decision if you have enough bitcoin to put up. If you plan to run a LN node for many years, at some point it will likely become profitable. For plebs with less than a million sats it's not worth it.

0 sats \ 2 replies \ @linda024352 13 Dec 2023

It is not a problem because the more bitcoin is adopted and the price rises, the more expensive it will be to move btc on the native network, therefore more people will migrate to lightning. And thAlso the price of lightning fees will increase with the increase in the price of btc

0 sats \ 1 reply \ @needcreations_ OP 13 Dec 2023

ok but how do we get more bitcoin on lighting for people to use if it costs $1000+ to open a lighting channel? lol

0 sats \ 0 replies \ @linda024352 13 Dec 2023

As fees will also go up and more adoption will open, more people will use lightning Highest Lightning Fee More adoption, i.e. many, more people using Lightning Channels Higher fee + lots of people using lightning = mejores ingresos para los dueños de los canales

0 sats \ 0 replies \ @antic 13 Dec 2023

The big nodes are profitable. It takes a certain amount of technical savviness. It’s going to be a long time before it’s really practical for the average person to just plug in an umbrel node and have everything truly ready to be stable/profitable. You need a lot more than that today.

I’m more worried about the “not your keys” movement on chain leading to a bottleneck of chain transactions and permanently high fees. Again, I think it’s a problem we will solve but that’s the most pressing to me.