Topological Evolution Analysis of Payment Channels in the Lightning Network

Camilo, Gustavo F.; Rebello, Gabriel Antonio F.; Souza, Lucas Airam C. de; Potop-Butucaru, Maria; Amorim, Marcelo Dias de; Campista, Miguel Elias M.; Costa, Luís Henrique M. K.

doi:10.1109/latincom56090.2022.10000445

Cited by 4 publications

(3 citation statements)

References 7 publications

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“…Refs. [39,40] both find that the Bitcoin LN is becoming more centralized, with a decreasing Nakamoto coefficient, increasing Gini coefficient and a core-periphery structure. To this end, several researchers have studied the topological properties of the LN and propose methods to improve the network's structure for enhanced security and potential [41].…”

Section: Network Topology and Modelingmentioning

confidence: 95%

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A Review of the Lightning Network’s Evolution: Unraveling Its Present State and the Emergence of Disruptive Digital Business Models

Dasaklis,

Malamas

2023

JTAER

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The Lightning Network (LN), a second-layer protocol built on top of the Bitcoin blockchain, is an innovative digital payment solution that offers increased convenience, speed, and cost-effectiveness to consumers and businesses alike. However, there is limited literature available on the characteristics of this nascent technology, the depth and breadth of the various business LN-related applications as well as relevant adoption/implementation challenges. This study aims to contribute to the understanding of the LN’s characteristics, its potential in enhancing business operations and its applicability across different sectors, while taking into account adoption and implementation challenges. We apply a narrative review methodology using a semi-systematic approach to examine new and emerging business models empowered by the LN and its characteristics, topology, performance, privacy and security. We analyze the data to identify key themes and trends in the literature, offering a critical analysis of the strengths and weaknesses of the existing literature. Based on the findings, we provide several clusters of fruitful areas for future research directions. This study not only provides crucial insights for businesses contemplating the adoption of LN to improve their operations and customer experience, but it also represents a substantial academic contribution, offering valuable knowledge and fostering further research in the fields of blockchain technology, FinTech and cryptocurrencies.

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Section: Network Topology and Modelingmentioning

confidence: 95%

“…[38] also observe increased inequality in the network. This centralization increases the network's vulnerability to security threats like split attacks and targeted attacks, contrasting with the goal of a fully decentralized network [39,40].…”

Section: Security and Privacymentioning

confidence: 99%

A Review of the Lightning Network’s Evolution: Unraveling Its Present State and the Emergence of Disruptive Digital Business Models

Dasaklis,

Malamas

2023

JTAER

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“…Os modelos atuais de posicionamento de nós, no entanto, desconsideram completamente os possíveis ganhos financeiros que podem aumentar as receitas dos usuários [LND 2022, Pickhardt 2019. Em geral, os modelos focam em conexões aos nós de maior grau, buscando obter menores caminhos aos demais participantes, o que aumenta a centralizac ¸ão da rede [Seres et al 2020, Camilo et al 2022]. Assim, faz-se necessário mudar os paradigmas dos modelos atuais para elevar os ganhos financeiros que os canais de pagamento podem gerar aos usuários ao longo da vida útil dos canais.…”

Section: Introduc ¸ãOunclassified

Posicionamento Lucrativo de Nós e Criação de Rotas de Baixo Custo na Rede Relâmpago

Camilo

Rebello

Souza

et al. 2023

Anais Do XLI Simpósio Brasileiro De Redes De Computadores E Sistemas Distribuídos (SBRC 2023)

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As redes de canais de pagamento (Payment Channel Networks - PCN) têm atingido sucesso ao substituir os lentos mecanismos de consenso global por acordos criptográficos locais entre nós participantes. Apesar do sucesso, as PCNs sofrem com os modelos atuais de posicionamento de novos nós participantes, que ignoram possíveis ganhos financeiros dos usuários e incentivam a centralização da rede. Este artigo apresenta um modelo de adição de novos nós à rede que cria conexões de alto retorno financeiro ao usuário e baixo custo de emissão de transações. O trabalho formula o problema da adição do nó à rede matematicamente e demonstra que o problema é NP-difícil. O modelo proposto permite ainda que usuários criem canais de longa duração. O artigo desenvolve uma heurística baseada em um algoritmo guloso para resolução do problema. A análise da heurística implementada mostra que a solução oferece recompensa até 3 vezes maior e custo 2 vezes menor que métodos tradicionais que priorizam nós de maior grau, maior centralidade ou PageRank.

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Decentralizing the lightning network: a score-based recommendation strategy for the autopilot system

Mahdizadeh,

Bahrak,

Sayad Haghighi

2023

Appl Netw Sci

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The fundamental objective of the Lightning Network is to establish a decentralized platform for scaling the Bitcoin network and facilitating high-throughput micropayments. However, this network has gradually deviated from its decentralized topology since its operational inception, and its resources have quickly shifted towards centralization. The evolution of the network and the changes in its topology have been critically reviewed and criticized due to its increasing centralization. This study delves into the network’s topology and the reasons behind its centralized evolution. We explain the incentives of various participating nodes in the network and propose a score-based strategy for the Lightning Autopilot system, which is responsible for automatically establishing new payment channels for the nodes joining the network. Our study demonstrates that utilizing the proposed strategy could significantly aid in reducing the network’s centralization. This strategy is grounded in qualitative labeling of network nodes based on topological and protocol features, followed by the creation of a scoring and recommendation model. Results of the experiments indicate that in the evolved network using the proposed strategy, concentration indicators such as the Gini coefficient can decrease by up to 17%, and channels ownership of the top 1% of hubs decrease by 27% compared to other autopilot strategies. Moreover, through simulated targeted attacks on hubs and channels, it is shown that by adopting the proposed strategy, the network’s resilience is increased compared to the existing autopilot strategies for evolved networks. The proposed method from this research can also be integrated into operational Lightning clients and potentially replace the current recommendation methods used in Lightning Autopilot.

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Topological Evolution Analysis of Payment Channels in the Lightning Network

Cited by 4 publications

References 7 publications

A Review of the Lightning Network’s Evolution: Unraveling Its Present State and the Emergence of Disruptive Digital Business Models

A Review of the Lightning Network’s Evolution: Unraveling Its Present State and the Emergence of Disruptive Digital Business Models

Posicionamento Lucrativo de Nós e Criação de Rotas de Baixo Custo na Rede Relâmpago

Decentralizing the lightning network: a score-based recommendation strategy for the autopilot system

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