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LNBIG routed 12.4 BTC yesterday... how does that extrapolate to network volume?
1657 sats \ 19 comments \ @andyleroy 26 Jul 2022 bitcoin
With 25 Nodes, 5504 active channels, and a combined active capacity of 891 BTC, LNBIG and their nodes offer the largest amount of capacity on the Lightning Network.
At ~22% of the Lightning Network's active capacity, what sort of data can we infer on total network volume?
Network capacity and node data sourced from Exponential Layers
LNBIG leads all other nodes in aggregate in total capacity. Bitfinex's two nodes and 823 BTC of combined active capacity are the second highest amount of combined capacity.
In addition to putting forth liquidity on the Lightning Network, offering liquidity and channel services, and driving overall adoption, LNBIG also offers incredibly transparent data on their routing operations.
Their latest Twitter posts show they routed 12.4 BTC one day ago and 11.3 BTC two days prior. With this data, we can do a bit of back-of the-napkin math to begin estimating total network volume:
  • Active network capacity: 3,984 BTC
  • LNBIG active capacity: 891 BTC
  • LNBIG two day routing average: 11.9 BTC
11.9 BTC routed on 891 BTC in active capacity extrapolates to 53 BTC routed on 3,984 BTC of overall active network capacity (~$1.1 million in current USD)
With this pace, that would put yearly routed volume on Lightning Network at 20,750 BTC (~$421 million) assuming no growth in the network. It's still a long way from the ~$10.4 trillion of Visa, but shows incredible growth rates and opportunity for the network ahead 📈
Thanks to LNBIG for all of their transparency sharing this data and driving forward network adoption.
What other metrics and factors should be included in this analysis or would be helpful in general?
If you would like to dig into the stats behind this analysis and see all of the Routing Nodes and their details, take a look at the Exponential Layers node directory. And while you're there, be sure to claim and add your node to the public directory âš¡
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200 sats \ 2 replies \ @kr 26 Jul 2022
Nice analysis.
It might also be useful to take the public metrics shared by folks like LN Markets, LQWD, Zero Fee Routing, and Steven Ellis into account to get a better estimate of average payment volume.
Different nodes have different strategies and that can lead to wildly different results when extrapolated on their own, but by bundling many of them together the average might be more accurate.
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204 sats \ 1 reply \ @andyleroy OP 26 Jul 2022
Thanks and 100% - this is definitely an incomplete "part 1" of many on consolidating all public data available. More to come soon!
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105 sats \ 0 replies \ @kr 26 Jul 2022
awesome, excited to read more!
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350 sats \ 3 replies \ @random_ 26 Jul 2022
Cool! How are you calculating those numbers?
https://github.com/ferencberes/LNTrafficSimulator
^ the creators of this program used data provided by LNBIG to calibrate their simulator and then estimate the daily traffic of other nodes.
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0 sats \ 2 replies \ @andyleroy OP 26 Jul 2022
Thanks for sharing this - this is really interesting work.
"Our findings on the estimated revenue from transaction fees are in line with widespread opinion that participation is economically irrational for the majority of large routing nodes who currently hold the network together. Either traffic or transaction fees must increase by orders of magnitude to make payment routing economically viable"
I'll be taking a deep dive...👀
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10 sats \ 1 reply \ @random_ 26 Jul 2022
Oh yea. There are a ton of channels that still have default fee policy.
They also show that most nodes are over provisioned, but I think that has more to do with price fluctuation.
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0 sats \ 0 replies \ @andyleroy OP 26 Jul 2022
There is some great stuff here - I'll dig in more to everything they did in this research. As for my numbers, I took the LNBIG data and plugged it into the "formula" above - with the rest of the data coming from Exponential Layers and specific back-end queries - that I aim to add to the UI in some form soon
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0 sats \ 4 replies \ @nullcount 27 Jul 2022
My node routed 1 Billion BTC in 12 seconds. Feel free to add that in your calculation. Here's the tweet to prove it: https://twitter.com/count_null/status/1552316644285988865
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100 sats \ 3 replies \ @andyleroy OP 27 Jul 2022
I'm not sure why you're trolling?
Your comments below questioning the business model of analytics and information services is reasonable - though perhaps in terms I wouldn't use.
However the idea that estimates and calculations aren't generally valuable or the thought that any of this is "surveillance" doesn't hold up. All of this data is available on public blockchains and network graphs. Companies or individuals pulling this information and making estimates is table stakes.
Have you ever tried to push forward a project, new idea, or initiative at work? ...without any data, KPIs, or research to back it up or define success metrics?
How would we ever have price discovery of Bitcoin (or anything for that matter) without disclosure of data?
It is natural to gather as much information as possible when making decisions - that's why companies spend $Billions for data to drive decisions. This data on LN is in its infancy and the "value" of it can certainly be questioned from a profit model perspective.
However it is the architecture and incentives of Bitcoin and Lightning are what lend it the immutability and decentralization properties that make it so important. Estimates on publicly available data aren't "surveillance".
And if we want to see the network grow to a hyperbitcoinization type of space, more transparency is ultimately better for markets (https://timevalueofbtc.medium.com/the-lightning-network-reference-rate-98e41a9dadfa)
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0 sats \ 2 replies \ @nullcount 27 Jul 2022
How do you know LNBIG isn't trolling. Why do you trust them and not me? What if I said I've established dozens of nodes with interconnected channels and zero routing fees. Then I set a script to automatically send the entire channel balance back and forth across my node. This is how I'm able to route 1 Billion BTC so fast. Do my nodes not count in your model?
I'm not giving credit to surveillance methods. They are also reading tea leaves.
Nothing wrong with making assumptions when building models. Just question your assumptions and realize how large your margin of error actually is.
If I claim there are hundreds of transactions per second but my margin of error could be in the hundreds of millions, how valuable is that claim?
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100 sats \ 1 reply \ @andyleroy OP 27 Jul 2022
There are flaws with any estimates...
I could spin up hundreds of nodes on the network - does that deterministically improve its usability? (no guarantees there)
I could open hundreds of channels to other nodes - but if they aren't being used then its like a highway to nowhere...not necessarily valuable
I could loads hundreds of BTC onto my node to add capacity - but unless its being deployed efficiently it is again of no use to the network
And yes I could spin up a few nodes and route payments back and forth all day to myself, boosting my volume numbers, but again doing nothing in real value for the network.
All of these numbers, and especially any non verifiable data must be looked at with a large grain of salt, and combined with other data to make any sort of useful extrapolations as to how valuable or successful growth has been.
This whole post is just one estimate - and I appreciate that yes this model could be wildly off and the data and its interpretation inconclusive of anything valuable.
But does that mean no one should ever do any analysis - or that this is "surveillance"? At some point it becomes hard to make a business case for running a node, opening a channel, deploying capital, or setting up all of the infrastructure and operations for a business to support lightning without having some semblance of why they are doing it
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100 sats \ 0 replies \ @nullcount 27 Jul 2022
Whether "analysis" qualifies as "surveillance" depends on how the data is used.
Anyone is free read the veins of a tea leaf and make any claim they wish based on their findings.
And everyone else is free to build their business case based on their claim. Including the surveillance companies.
LNBIG has dozens of nodes too. So we're not that different ;)
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10 sats \ 0 replies \ @Cornleone 26 Jul 2022
I'd be curious if the activity peaked during a certain time of day, and when it slows down.
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0 sats \ 5 replies \ @nullcount 27 Jul 2022
Don't trust, verify. Unless it's a LN node telling you their unverifiable routing stats. Then trust and base all your "calculation" from that. Smh
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100 sats \ 4 replies \ @andyleroy OP 27 Jul 2022
I'm not sure I follow? It's all an "estimate" and "extrapolation" by design.
Perhaps in the future a market will evolve for more detailed stats, but the privacy and "non verifiable" data is a fundamental part of the network design - hence the estimates and calculation.
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0 sats \ 3 replies \ @nullcount 27 Jul 2022
Estimates and calculations of network activity are (at best) an exercise in mental masturbation or (at worse) attempted surveillance methods. There's no way to verify how accurate these estimates are. Even if every node on the network went fully "transparent" there's no way to prove their disclosures are accurate. What you're doing is not science, it's reading tea leaves.
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0 sats \ 2 replies \ @andyleroy OP 27 Jul 2022
So what metrics would you use to determine if and how Lightning Network is being adopted and is successful?
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0 sats \ 1 reply \ @nullcount 27 Jul 2022
Verifiable data points like node count, public channel count, and public capacity.
Anything else used to "build a better model" is not verifiable, so it arguably makes the model worse.
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100 sats \ 0 replies \ @nullcount 27 Jul 2022
You could probe for unannounced channels and publish their funding transactions and channel point. That would be a "value add" in terms of estimating true usage of the network.
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